Low water-wettability and oxidation resistance of graphite have limited its application in carbon containing refractory castables. The aims of this study are the improvement of water-wettability and the oxidation resistance of natural flaky graphite by applying an oxide coating on its surface. To develop the coating, magnesium aluminate spinel sol was formulated via a citrate–nitrate route and graphite powder was then added to the sol. The mixture was heat treated in appropriate temperature and atmosphere to get the polycrystalline MgAl 2O 4 coating on graphite particles surface. The microstructure of coating was studied by X-ray diffractometer, SEM and TEM. The water-wettability was evaluated by measuring the water drop contact angle and plotting the zeta potential vs. pH. The results showed the development of a stable nanocrystalline MgAl 2O 4 spinel coating which improved the water-wettability and oxidation resistance of graphite significantly. Also, characterization of the coating is explained with emphasis on its application importance.