Oxidation of petroleum asphaltenes by potassium iodide (KI) is described. Oxidation under mild conditions is shown to be accompanied by iodination of the asphaltene aromatic core. The inducing reaction is the oxidation of sulfide sulfur atoms in the asphaltenes with reduction of iodate anion to molecular iodine; the coupled reaction, electrophilic substitution. X-ray photoelectron spectroscopy detected an increase in the mass fraction of oxygen as compared with the initial sample and formation of C-I bonds. IR spectroscopy found that oxidation of the asphaltenes is accompanied by the formation of carboxyl and sulfoxide groups. Raman spectroscopy revealed a decrease in the size of the oxidized asphaltene molecules as compared to the native asphaltenes. X-ray powder diffraction analysis showed a decrease in the interplanar spacing of the asphaltene oxidation product that was due to ordering and a denser arrangement of the aliphatic fragments.