Abstract Steam-Assisted Gravity Drainage (SAGD) has been the preferred thermal method for bitumen recovery from reservoirs in western Canada. To save energy and to be more environmentally friendly, Expanding-Solvent SAGD (ES-SAGD) is herein proposed by adding solvent into the injection vapor. The addition of solvent gives rise to different phase behavior (solvent–steam–bitumen) characteristics than that of the steam-only injection (steam–bitumen) process. Early steam condensation, solvent accumulation in the vapor phase, and convective oil flow near the steam boundary are critical mechanisms of the ES-SAGD process. In this paper, the phase behavior of the steam–solvent–bitumen system and solvent mass transfer in oil are studied through a numerical simulation method. Results show that the dominant mechanism of solvent dissolution in oil is by gas–oil equilibrium, rather than condensate mixing. The dissolved solvent is further convectively delivered into the mobile oil zone by gravity drainage. Under high solvent injection concentration, oil production rate is improved by the significant amount of solvent dissolution in oil. The high injection pressure enhances oil production rate through enlarging the mobile oil zone. In addition, this study proposes a steam–solvent injection strategy to improve the ES-SAGD process.