Birch tar is the oldest synthetic substance made by early humans. The earliest such artefacts are associated with Neanderthals. According to traditional interpretations, their study allows understanding Neanderthal tool behaviours, skills and cultural evolution. However, recent work has found that birch tar can also be produced with simple processes, or even result from fortuitous accidents. Even though these findings suggest that birch tar per se is not a proxy for cognition, they do not shed light on the process by which Neanderthals produced it, and, therefore, cannot evaluate the implications of that behaviour. Here, we address the question of how tar was made by Neanderthals. Through a comparative chemical analysis of the two exceptional birch tar pieces from Königsaue (Germany) and a large reference birch tar collection made with Stone Age techniques, we found that Neanderthals did not use the simplest method to make tar. Rather, they distilled tar in an intentionally created underground environment that restricted oxygen flow and remained invisible during the process. This degree of complexity is unlikely to have been invented spontaneously. Our results suggest that Neanderthals invented or developed this process based on previous simpler methods and constitute one of the clearest indicators of cumulative cultural evolution in the European Middle Palaeolithic.