Thermal hydrocracking and slurry-phase hydrocracking of Karamay vacuum residue (KLVR) were studied, and the hydrocracked products were analyzed by gas chromatography (GC) and a paraffins, olefins, naphthalenes, and aromatics (PONA) composition analysis system. The effects of the temperature and initial hydrogen pressure on the isomerization reaction in heavy oil slurry-phase hydrocracking were investigated. Experimental data revealed that the conversion of KLVR increased as the temperature and initial hydrogen pressure increased in both thermal hydrocracking and slurry-phase hydrocracking. Hydrogen consumption of slurry-phase hydrocracking increased with the increase of the temperature and initial hydrogen pressure, while hydrogen consumption in thermal hydrocracking was negligible. Two impact indexes RG' and RN' were proposed to study the isomerization reaction in heavy oil slurry-phase hydrocracking. The results indicated that a high temperature and high initial hydrogen pressure enhanced the isoparaffin restraining effect of a dispersed Mo catalyst. Under a certain reaction temperature, the linear relation between impact indexes and hydrogen consumption was observed, indicating that the isomerization reaction was inhibited by hydrogen participating in a free-radical reaction.