The chemical effect of supercritical water (SC-H2O) on catalytic cracking of heavy petroleum residue was investigated over silica-supported hematite iron oxide nanoparticles, and the stability of catalyst against coke formation was approved by numerous analyses after sequence of reactions. First, the catalysts of process, with different active phase (alpha-Fe2O3) to support (SiO2) weight ratio, were prepared successfully via supercritical water impregnation approach. The performance of the alpha-Fe2O3-SiO2 was then considered on transformation of vacuum residue (VR) to lighter fuels in supercritical water medium. Comparing the results with non-catalytic degradation, i.e., SC-H2O pyrolysis, improvement of heavy oil conversion towards lighter fragments (maltene) was attained. The higher amount of asphaltene transformation as well as suppression in coke formation over/in catalyst could be attributed to larger portion of cracking occurred mainly in catalyst surface and pore volume (PV), whereas the cracking based on pyrolysis was accomplished free-radically in bulk volume (BV). In catalytic reaction, a consecutive cyclic reaction is taking place as; oxidative cracking of asphaltene over catalyst (with converting Fe3+ -> Fe2+) followed by in-situ hydrogenation of cracked fragments via in-situ hydrogen resulted from dissociation of water (with converting Fe2+ -> Fe3+). Moreover, SC-H2O reforming of hydrocarbons (CmHn) and conversion of those containing oxygen-containing groups, e.g., ethers, esters, carboxyls, carbonyls, to CO as well as related water-gas shift reaction (CO + H2O -> H-2 + CO2) would facilitate over catalyst by which higher amount of asphaltene conversion and maltene yield were attained. (C) 2015 Elsevier B.V. All rights reserved.