A disposable iron-based catalyst, red mud, was modified by different dissolution-precipitation methods. The catalysts obtained were characterized by nitrogen adsorption, X-ray diffraction, scanning electron microscopy, and ammonia temperature-programmed desorption. They were tested for slurry-phase hydrocracking of vacuum residue in a batch reactor. The red-mud catalyst activated by phosphoric acid showed the highest catalytic activity since the activation by phosphoric acid resulted in the decrease in particle size which facilitated the transformation of red mud to the active sulfide form in the reaction.