A nickel aluminide coating was formed on P92 steel substrate using a two step process of electro-Ni plating followed by pack aluminising at 650 °C. The coating was tested in 100% steam to assess its resistance against steam oxidation at 650 °C using a purpose-built rig for steam oxidation tests. The data obtained were compared with those measured from air oxidation test at the same temperature. It was revealed that steam is a more severe oxidising environment than air for the coating. Oxidation kinetics and degradation mechanisms affecting the lifetime of the coating were discussed.