The present invention relates to a continuous in-situ process for the removal of organically bound sulfur existing as mercaptans, sulfides and thiophenes comprising the steps of (a) contacting a heavy oil with aqueous sodium hydroxide at a temperature of about 380.degree. C. to about 450.degree. C. for a time sufficient to form sodium sulfide, and (b) steam stripping the sodium sulfide of step (a) at a temperature sufficient to convert said sodium sulfide to sodium hydroxide and recirculating the sodium hydroxide from step (b) back to step (a) and removing hydrogen sulfide and the metals from the organically bound metal complex of the sodium sulfide to convert it back to sodium hydroxide, in which case the sulfur may be recovered as H.sub.2 S rather than the metal sulfide. Optionally, molecular hydrogen may be added in the first step. The present invention is useful in removing organically bound sulfur that has been recognized to be difficult to remove, such as thiophenes. Beneficially, the process also removes other heteroatoms (nitrogen and oxygen) and metals (vanadium, iron, nickel) and reduces asphaltene content (n-heptane insolubles), micro concarbon residue, coke, 975.degree. F. fractions, TGA fixed carbon, average molecular weight, density and viscosity.