The surface steam injection is the most common enhanced oil recovery (EOR) process used in heavy oil production. Nevertheless, there are limitations due to the heat loss for deep reservoirs and for offshore fields. Downhole steam generators (DHSG) are a new technology that opens a new path for recovery of heavy oil from deep reservoirs, offshore fields and extreme cold regions. Downhole steam generators eliminate the need for surface steam distribution systems, for flowlines and wellbore steam strings. The outflow of DHSG generators are a mixture of steam and flue gas. The main objective of this paper is to investigate the recovery dynamics of steam injection combined with flue gas at lab scale to recover a 16.14°API heavy oil from a sandpack. Superheated steam at 170°C was co-injected at flow rates between 5 and 4.5 ml/min (cold-water equivalent) with flue gas at flow rates between 150 and 340 ml/min in a linear cell built for the continuous injection of steam. From the results it can be asserted that co-injection reduces by 10% the amount of steam needed for an equivalent recovery. That translates in cutting steam generator costs on a per barrel of oil produced basis. The results of the tests addressed in this study provide: 1) The gas helps to keep the pressure behind the front more stable; 2) the co-injection of steam with flue gas accelerates the start of oil production when compared with steam injection alone; 3) Results indicates recovery factors up to 79%. The results favors DHSG as a promising technology for enhanced oil recovery of heavy oils, mainly for offshore fields or reservoirs at great depth.