Large M7C3 carbides were refined by inoculation with small levels (0, 0.1, 0.5, and 1 wt%) of aluminum in chromium carbide overlay. Multiple cracks were observed in the large primary M7C3 carbides in 0% aluminum sample, while less cracking was observed for refined M7C3 carbides, under similar scratch tests. The refinement mechanism is believed to involve the heterogeneous nucleation of carbides on Al2O3 that has formed prior to M7C3 nucleation. Aluminum is shown to shorten the growth time of primary M7C3 carbides by raising the eutectic temperature. The overlay is slightly softer in the 1% aluminum sample due to a decrease the amount of martensite and an increase of retained austenite in the overlay matrix. A new approach is introduced to refine the primary M7C3 carbides by using a small amount of Al addition without producing new hard phases.