A novel composite MCrAlY coating with a fine dispersion of sub-micron Al2O3 particles were sprayed by high velocity oxygen fuel (HVOF) thermal spraying for high temperature oxidation protections. The presence of Al2O3 could reinforce the metallic MCrAlY coatings, in a similar way to ODS alloys (oxide dispersion strengthening). It could also enhance the oxidation resistance owing to the dispersion of Al2O3 on the surface as nucleation sites, which promotes the early formation of a coherent α-Al2O3 scale. This is essential for an effective protection against oxidation attack, especially for these applications at relatively lower temperatures (<900 °C) with slower growing Al2O3. In this study, a suspension route was employed to achieve a uniform dispersion of 0-10 wt.% Al2O3 particles with commercial MCrAlY powders. A liquid fueled HVOF spray gun (MetJet IV) was used to deposit the composite MCrAlY-Al2O3 coatings onto 304 stainless steels substrates. The composite coatings were examined thoroughly by field emission gun scanning electron microscopy (FEGSEM) with energy dispersive X-ray spectroscopy (EDX) and X-ray diffraction (XRD) analysis. Isothermal oxidation at 900 °C was carried out to study the effect of Al2O3 on the growth of oxide on the coatings surface. The composite coatings exhibited superior oxidation behavior against the conventional metallic coatings with the formation of nearly exclusively Al2O3 on the coatings surface and inhibited NiO growth.