A new three-dimensional Lie algebra and its loop algebra are proposed by us, whose commutator is a vector product. Based on this, a positive flow and a negative flow are obtained by introducing a new kind of spectral problem expressed by the vector product, which reduces to a generalized KdV equation, a generalized Schrödinger equation, a sine-Gordon equation, and a sinh-Gordon equation. Next, the well-known Tu scheme is generalized for generating isospectral integrable hierarchies and non-isospectral integrable hierarchies. It is important that we make use of the variational method to create a new vector-product trace identity for which the Hamiltonian structure of the isospectral integrable hierarchy presented in the paper is worded out. Finally, we further enlarge the three-dimensional loop algebra into a six-dimensional loop algebra so that a new isospectral integrable hierarchy which is a type of extended integrable model is produced whose bi-Hamiltonian structure is also derived from the vector-product trace identity. This new approach presented in the paper possesses extensive applications in the aspect of generating integrable hierarchies of evolution equations.