CeyZr1−yO2 is introduced to alumina support in NiK/xCeZr-Al catalysts. The NiK/xCeZr-Al catalysts is applied for cracking of vacuum residue with steam. Addition of Ce and Zr could greatly improve the catalytic performance of the catalyst. The highest catalytic performance is obtained when using 10 wt.% CeyZr1−yO2. A mechanism for oxidative cracking over CeyZr1−yO2 phase is proposed.