The formation mechanism of the oxide film on Fe-Cr-Al alloy, the effects of sulfur on the adhesion of the oxide film, and the role of RE element Y on the improvement of the oxide film adhesion were systematically studied on an electronic level, so that the physical nature of oxidation of the alloy was revealed. The results show that Al atom (compared with Cr or Fe atom ) has the lowest environment-sensitive embedding energy when O atoms are present on the alloy surface, thus leading to an outward diffusion of Al atoms from the interior of the alloy, and hence to the segregation of Al atoms on the alloy surface. Oxygen atoms are easy to combine with Al atoms to form Al2O3 oxide films on the alloy surface due to its high affinity with Al atoms. The impurity S has a lower environment-sensitive embedding energy on the interface between the Al2O3 oxide film and the alloy matrix than within the alloy matrix, suggesting that S can diffuse (segregate) to the interface. S atoms segregated on the interface weakens the cohesion of Al2O3 oxide film with the alloy matrix. Y is easy to combine with sulfur to form a stable sulfide within the interior of the alloy matrix, which inhibits the diffusion of sulfur to the Al2O3 oxide film /matrix interface. Y added into the alloy can thus markedly increase the adhesion of the oxide film with the alloy matrix, and significantly improve the high-temperature oxidation resistance of the alloy.