In this study, a NiK/CeO2 catalyst was employed to investigate the interaction between Ni metal and CeO2 support and its effect on the oxidative cracking of vacuum residue (VR). In the reaction results, a large amount of light oils, including naphtha, diesel and VGO, was produced through oxidative cracking over CeO2, and the quality of the liquid products was significantly improved by hydrogenation. The interaction between Ni metal and CeO2 support induced the formation of a CeyNi1−yO2−δ solid solution and increased the number of oxygen vacancies, thus enhancing the oxidative cracking of VR. Further, the addition of NiK into the supports provided Ni metallic sites for hydrogenation, producing more liquid products with a high H/C ratio. As a result, the NiK/CeO2 catalyst showed a higher diesel yield (22.87%) than that without catalyst (9.14%).