Hydrocracked products from Arabian light vacuum residue at high conversion into distillate (>50%) were analyzed in order to reveal how sludge formation was suppressed in the two-stage reaction. Althugh the asphaltene in the starting residue was highly soluble in the starting maltene in spite of its largest molecular weight, single-stage hydrocracking at a higher temperature of 420 °C increased the aromaticity of the asphaltene through extensive dealkylation and dehydrogenation, leading to sludge formation. In contrast, two-stage hydrocracking at 390° C-3 h/420 °C-1 h accomplished effective depolymerization of the asphaltene, high conversion being achieved without sludge. The carbon aromaticity (fa) of the produced asphaltene was maintained rather low, although its amount in the product was much the same regardless of the reaction conditions. The heptane-soluble maltenes in the hydrocracked oils exhibited variable dissolving abilities against the asphaltene according to the content and aromaticity of its aromatic fraction, also influencing sludge formation. Hydrocracking produced paraffins through the hydrogenative dealkylation of long-chain alkylbenzenes, decreasing faand the dissolving ability of the hydrocracked maltene. © 1990, American Chemical Society. All rights reserved.