A novel micro-emulsion was prepared by mixing an oil-soluble viscosity reducer, which was screened to aim at improving the heavy oil properties of Shengli oilfield with water-soluble surfactant and co-surfactant. The static viscosity reduction and oil washing performance of the micro-emulsion were investigated, and the field application of the micro-emulsion used as heavy oil displacement agent was also reported. Results showed that the micro-emulsion exhibited excellent viscosity reduction performance for the studied heavy oil samples. When heavy oil was mixed with 0.5% of the micro-emulsion, a stable oil-in-water heavy oil emulsion could be formed. After the content of the micro-emulsion was increased to 3.0%, the oil removing rate reached up to 80%. Field application of the micro-emulsion to the Pai-601-Ping-115 well and the Pai-601-Ping-123 well was shown to be effective by increasing the periodic oil production up to 203 tons.