•Asphaltene dispersion stability in a slurry phase hydrocracking reaction was studied.•The solubility parameters, the structure of the asphaltene, and sediment content in the liquid product were analyzed.•The asphaltene dispersion was deteriorated and the sediment content increased rapidly at about 50% of VR conversion.•Microscopic observation directly confirmed asphaltene flocculation.•Asphaltene dispersion stability was improved with the promotion of hydrogenation reaction. Asphaltene precipitation is known as a challenging issue to fully upgrade heavy oils. In this study, asphaltene dispersion stability and sediment formation for a slurry phase hydrocracking reaction of vacuum residue was investigated with changes of temperatures (405–435 °C), LHSV (0.20–0.45 hr-1), pressures (80–180 bar) and superficial gas velocities (0.4–2.2 cm/s) in a bench-scale continuous system. The characteristics of dispersion stability were examined with the solubility parameters at the flocculation point (UV titration), the structure of the asphaltenes (H-NMR), and sediment content in the liquid product (Hot filtration). As results, it was found that the dispersion stability of asphaltene was mainly dependent on the VR conversion. In particular, at about 50% of the VR transition, the solubility was found to be unstable and the amount of deposition increased dramatically. At the same time, microscopic observation directly confirmed asphaltene flocculation. However, when H2 partial pressure was increased, the hydrogenation reaction of asphaltene was promoted so that it could reduce sediment formation and improve both the asphaltene solubility and structure for the stable dispersion. On the other hand, increasing the superficial gas velocity did not give an effect on the asphaltene dispersion stability.