"on vacation" is correct.
�          Common mistakes with in/on/at
   
o   Not used with vacations, use �over� or �during� for specific vacations, but simply �on� for vacation alone.
�  (Wrong) In summer vacation, I had a part time job.
�  (Right) During summer vacation, I had a part time job.
�  (Right) Over summer vacation, I had a part time job.
�  (Wrong) I had a good time in vacation.
�  (Right) I had a good time on vacation
 
Cheers --- Jayho