Thermal oxidation is believed as an important phenomenon that naturally occurs on material subjected to elevated temperature such as NiAl-Al2O3 coated material. In the present study, thermal oxidation on this coated layer was prepared by heating processes of NiAl-Al2O3 coated on mild carbon steel. Deposition of NiAl-Al2O3 was performed by high-velocity oxy fuel (HVOF) process, whereas subsequent heating processes were performed at 3 different temperatures 600oC, 800oC and 1000oC. After the process, the effects of this thermal oxidation process on the phases formation, microstructure and qualitative toughness of thermally sprayed NiAl-Al2O3 coating were investigated. The results showed that significant amount of NiAl-Al2O3 phase was transformed into NiO phase by heating process at temperature higher than 800°C. In addition, decreasing of thickness of the coating layer was also found as the service temperature increases from 800 to 1000oC. Increasing of hardness was also observed as the heating temperature increases, which is predicted due to the formation of excessive oxide on the coating layer that in turn might impart the toughness of this layer. These conditions suggested that a careful determination of service temperature have to be taken in order to avoid excessive oxidation of the coating layer.