The microstructure of the coating prepared by reactive plasma spraying Fe 2 O 3 /Al composite powders was characterized by x-ray diffraction, scanning electron microscopy, and transmission electron microscopy. The results indicated that the coating exhibited nanostructured microstructure which consisted of FeAl 2 O 4 , Fe or Fe solid solution, Al 2 O 3 and a little FeAl. In the composite coating, spherical Fe particles (tens of nanometers to hundreds of nanometers) were distributed uniformly within the equiaxed and columnar nanograins FeAl 2 O 4 matrix. There were two kinds of Al 2 O 3 phases present in the composite coating. One kind was nano-sized Al 2 O 3 particles uniformly dispersed within the matrix, forming eutectic structure of (FeAl 2 O 4 + c-Al 2 O 3 ); the other was 1-1.5 lm Al 2 O 3 particles embedded individually within the matrix. The composite coating had higher toughness than the conventional microstructured Al 2 O 3 coating.