ASTM P23 steel (Fe-2.25Cr-1.6W-0.1Mo in wt.%) was hot-dip aluminized and oxidized at 800∘C and 1000∘C for 20 h in air in order to determine the effect of aluminizing on the microstructure, hardness, and oxidation resistance of P23 steel. Aluminizing effectively increased the oxidation resistance of P23 steel by forming protective αα-Al2O3 scales. During oxidation, outward diffusion of substrate elements and inward transport of Al and oxygen occurred simultaneously. The oxidation and interdiffusion formed voids in the coating, lowered the microhardness, and transformed the original (Al-rich topcoat)/(Al13Fe4 layer) to either (thin α-Al2O3 scale)/(Al5Fe2 layer)/(AlFe layer)/(AlFe3 layer)/(α-Fe(Al) layer) at 800∘C or (thick α-Al2O3 scale)/(AlFe3 layer)/(α-Fe(Al) layer) at 1000∘C. At 1000∘C, Fe2O3 was also formed in addition to α-Al2O3 scale, due to the enhanced outward diffusion of Fe, thus suppressing the formation of cracks in the coating.