Heroin is produced for the black market through opium refinement processes. The production of heroin requires considerable expertise in chemistry and access to constituents which are now tightly controlled, the refinement of the first three grades of heroin from opium is a relatively simple process requiring only moderate technical expertise and common chemicals. The final grade of heroin favored in the west is more difficult to produce and involves a potentially dangerous chemical procedure.

First, morphine is isolated from crude opium by being dissolved in water, reacted with lime fertilizer such that the morphine precipitates out, and then reacted again with ammonia. What remains is then mechanically filtered to yield a final product of morphine weighing about 90% less than the original quantity of opium. The morphine is reacted with acetic anhydride — a chemical also used in the production of aspirin — in the complicated five-step process used by most refineries in the Golden Triangle. The first step is to cook the morphine at 85°C (185°F) for six hours with an equivalent weight of acetic anhydride. In the second, a treatment of water and hydrochloric acid then purifies the product moderately. When the chemists add sodium carbonate, the particulates settle. Step four involves heating the heroin in a mixture of alcohol and activated charcoal until the alcohol evaporates. The fifth step is optional, as it only changes the heroin into a finer white powder, more easily injectable; this so-called "no. 4 heroin" is principally exported to the Western markets. In this last, most dangerous step, the heroin (after being dissolved in alcohol), precipitates out in tiny white flakes when a mixture of ether and hydrochloric acid is injected; this step is dangerous due to the fact that the ether may explode, leveling or severely damaging the refinery (as has happened to a number of such facilities).

The purity of the extracted morphine determines in large part the quality of the resulting heroin. Most black market heroin is highly impure due to contaminants left after refinement of opium into morphine which then remain in the final product; even if the final product is in the upper range of purity (80–99% pure), once it reaches the consumer, it has typically been cut multiple times.