Ultrafine and stable slurry-phase hydrocracking catalysts were prepared by the reverse micelle (RM) method. The optimization of RM catalysts was carried out using different solvents, metal (molybdenum) concentrations, and reaction temperatures. The effect of cobalt as a promoter metal was also evaluated. For this preparation method, different solvents such as pentane, hexane, and diesel were used. Hydrocracking activities of the prepared catalysts were tested using vacuum residue (VR) that has a high concentration of impurities. The catalyst prepared by the RM method using diesel as the solvent shows very high hydrocracking activity of the vacuum residue. Coke formation at the end of the reaction by this catalyst is also very low compared with the other catalysts. The thermogravimetric analysis (TGA) results show that the catalyst prepared using diesel as solvent is thermally stable. With its high stability, the catalyst remains in an ultrafine dispersed phase at actual reaction conditions. These ultrafine catalyst particles form a layer in between the submicron mesophase, which is a precursor of coke. Therefore, coke formation is very low for this catalyst. Other two catalysts prepared using pentane and hexane solvents were found not to be stable at reaction conditions. In these, catalyst particles may agglomerate into big particles, which then act as nucleation sites for mesophase asphaltene, promoting coke formation instead of coke inhibition. The coke yield is also high at higher Mo concentrations in the catalyst. The results revealed that the RM method can be used effectively to prepare an ultrafine dispersed catalyst for residue hydrocracking. However, the use of a suitable solvent plays an important role in forming a stable dispersed and highly effective catalyst.