An improved process for heavy oil conversion and upgrading and a combined method for heavy oil conversion and vacuum gas-oil treatment are described herein. The method utilizes the creation and recycle of a separate product from the vacuum still, which is thereafter recycled back to the heavy oil conversion reactor. The result is the production of a higher quality medium gas oil product relative to the overall vacuum gas oil product which is acceptable for use in a typical vacuum gas oil treatment process. Additionally, there is a higher diesel yield selectivity from the heavy oil conversion unit.