In the present paper, the isothermal oxidation behavior of alloy HK40 in H2H2O atmosphere in the temperature range 850–950 °C was systematically investigated by means of TGA, XRD, SEM, and EDS. The results demonstrated that the oxidation of alloy HK40 under low oxygen partial pressure obeyed a cubic instead of parabolic rate law. The values of the oxidation rate constant k at 850, 900, and 950 °C were 0.0079, 0.01886 and 0.04031 mg3/(cm6 h) at 850, 900, and 950 °C, respectively. The scales were composed of MnCr2O4 and Cr2O3. MnCr2O4 mainly existed in the form of blades in the outer part of the scale and its amount gradually increased with increasing temperature. In addition, there were silica particles along the scale/metal interface and indications were found that they contribute to the improvement of scale spallation resistance at high temperature as found by scratch tests.