In this paper we shall study vector cascade algorithms and refinable function vectors with a general isotropic dilation matrix in Sobolev spaces. By investigating several properties of the initial function vectors in a vector cascade algorithm, we are able to take a relatively unified approach to study several questions such as convergence, rate of convergence and error estimate for a perturbed mask of a vector cascade algorithm in a Sobolev space $W_p^k(\RR^s) (1\le p\le \infty, k\in \NN\cup \{0\})$. We shall characterize the convergence of a vector cascade algorithm in a Sobolev space in various ways. As a consequence, a simple characterization for refinable Hermite interpolants and a sharp error estimate for a perturbed mask of a vector cascade algorithm in a Sobolev space will be presented. The approach in this paper enables us to answer some unsolved questions in the literature on vector cascade algorithms and to comprehensively generalize and improve results on scalar cascade algorithms and scalar refinable functions to the vector case.