A method for hydrocracking petroleum heavy grade oil containing heavy metals in a slurry bed reactor with the help of an iron catalyst is provided. This method includes a step of selectively removing TI (toluene insolubles) by sedimentation solid-liquid separation from the liquid fluid arising from the reaction product. The procedure for separation causes no clogging in the underflow of the settling tank (sedimentation solid-liquid separator) and requires no large settling tank. The selective TI removal is accomplished by using a light solvent for solid-liquid separation which is a mixture composed of aromatic light solvent and self-supplied light solvent arising from the hydrocracking. The mixed solvent is used in an amount 2 to times the amount of the liquid fluid from which TI is to be selectively removed, and the sedimentation solid-liquid separator is run at 130-250°C.
