Heavy oil and bitumen resources will need to be exploited to supplement depleting conventional oils worldwide as they gradually approach their peak production in the forthcoming decades. However, the physico-chemical characteristics of heavy oil and bitumen include high density, low distillates fraction, high viscosity, and high hetero-atom content which make extraction difficult and relatively expensive. The Toe-to-Heel Air Injection (THAI) and ‘add-on’ Catalytic upgrading process in situ (CAPRI) were specifically developed for the recovery and upgrading of heavy oil and bitumen. In this study, the effects of reaction gas media used in THAI–CAPRI were investigated, in particular the effects of using hydrogen, methane, nitrogen, and a blended gas mixture to simulate THAI combustion gases with Co–Mo/γ-Al2O3 catalyst at a reaction temperature of 425 °C, pressure 10 bar, and gas-to-oil ratio 50 mL mL−1. Ex situ regeneration of the spent catalyst by thermal oxidation of the asphaltenes and coke deposits was also investigated. It was found that the average changes in API gravity of the produced oil were 4° using hydrogen, 3° with methane, 2.9° with THAI gas, and 2.7° with nitrogen above the value of 14° API gravity for the feed oil. The viscosity reduction and conversion of hydrocarbons with boiling point 343 °C+ into lower boiling distillable fractions followed the same trend as the API gravity. The percentage loss in specific surface areas as a result of coke deposition in the different reaction gases were as follows: 57.2% for hydrogen, 68% for methane, and 96% for nitrogen relative to the surface area of the fresh catalyst of 214.4 m2 g−1. It was found that the spent catalyst contained 6 and 3 wt.% less coke after six hours operation when using hydrogen and methane reaction gases respectively compared to 23.5 wt.% coke content in a nitrogen atmosphere. Also, 48.5% of the catalyst specific surface area was recovered after oxidative regeneration.