Abstract: The microstructural features of NiCrAlY alloy powders with different particle size fractions and their effects on the overlay coating property have been investigated. It is shown that the finer (20~30 μm) powder particles experience rapid recalescence and heat extraction to the surroundings resulting in microcellular structure, whereas the coarser (40~50μm) powder particles exhibit a coarse cellular and dendritic mixed structure because of recalescence followed by slow cooling.In addition, it is also indicated that the finer the powder particle sizes, the higher the mechanical property and the metallurgical thermal stability of the overlay coatings deposited by as-atomized powders, which is presumably attributed to the formation of dense fine grain Structure and oxide layer for the fine size fraction of the powders.