Graphitization behavior of water-atomized cast iron powder at each thermal spraying step, such as droplet flight, droplet impingement and splat layering, was successively examined. Both as-atomized cast iron powder and coatings sprayed with the powder contain no graphite structure owing to their rapid solidification. A short period of pre-annealing at 1173 K allows the formation of graphite structure in the cast iron powder, in which there exist precipitated graphite of 3.58 mass%. The microstructure observation exhibits that pre-existed pores in the as-atomized powder strongly affect the precipitating sites of graphite, that is, mainly inside the individual powder instead of the surface. However, marked reduction in graphite structure occurs to coatings sprayed with the pre-annealed powder because of in-flight burning and dissolution into molten iron. In-process post-annealing at 773 K for 60 s reveals the formation of graphite structure resulted from the decomposition of iron based metastable carbide in splats and coatings sprayed with the as-atomized powder. Chemical analysis demonstrates that graphitization level of post-annealed cast iron coatings is higher than that of coatings sprayed with the pre-annealed powder. Precipitated intersplat graphite structure of 1.68 mass% appears in cast iron coatings when introducing methane as a powder feeding carrier gas which is liable to decompose in plasma flame. The resultant coatings with graphite structure embedded in hard matrix are anticipated to offer superior wear resistance in comparison to centrifugally cast iron containing flaky graphite of 1.76 mass%.