The method of the present invention involves a two-phase process for in-situ retorting and recovery of carbonaceous material contained within typical subterranean tar sand formations, and includes formation of conventional arrays of in-seam ducts, and positioning heating devices to heat a section of the formation over a large extent thereof. The operation of the heating devices in the first phase is controlled to provide heat into the formation without burning of the carbonaceous material therein, resulting in development of a quasi-stable zone of pyrolysis about the heating duct, to thermally crack the carbonaceous material producing various organic liquid oil fractions and derived condensible vapors and non-condensible gases. The products produced thereby are then withdrawn through a suitable array of collection wells. In the second phase of the process a residual coke layer that will have formed as a result of the pyrolysis of the carbonaceous material is burned by introducing a combustion-supporting gas, such as air or oxygen, into the hot sand-coke blanket preferrably via the line source heating ducts spontaneously igniting the coke to produce a temperature elevation in the zone of pyrolysis to both crack the proximate carbonaceous material and to burn away the coke layer from around the shut-in collection wells freeing them to continue withdrawal of the products of the cracking process. After combustion of the basal sand-coke blanket air flow to the tar sand formation will be terminated and the heater operation restored, repeating the process.