The present invention is directed to the upgrading of heavy hydrocarbon feedstock. The process of the present invention provides for the preparation of a partially upgraded feedstock exhibiting reduced viscosity and increased API gravity. This process reduces the viscosity of the feedstock in order to permit pipeline transport of the upgraded feedstock with little or no addition of diluents. The method for upgrading a heavy hydrocarbon feedstock comprises introducing a particulate heat carrier into an upflow reactor, introducing the heavy hydrocarbon feedstock into the upflow reactor at a location above that of the particulate heat carrier, allowing the heavy hydrocarbon feedstock to interact with the heat carrier to produce a product stream, separating the product stream from the particulate heat carrier, regenerating the particulate heat carrier, and collecting a gaseous and liquid product from the product stream.