Ti3AlC2 powder was prepared via an efficient solid-liquid reaction in flowing argon using coconut shell charcoal as novel carbon source, and phase evolution, microstructure and oxidation behavior of Ti3AlC2 powder were investigated. The results show that coconut shell charcoal is dominated by amorphous carbon after carbonization with some turbostratic graphite-like structure, and large specific surface area of coconut shell charcoal gives its excellent reactivity. Ti3AlC2 powder prepared at 1400 °C for 1.5 h exhibits good crystallinity and typical nanolayered structure. Ti3AlC2 powder remains thermally stable in air below 552 °C, while oxidizing occurs rapidly between 900 and 1100 °C. The isothermal oxidation curves show a parabolic-like, indicating that the oxidation process is primarily controlled by a diffusion mechanism. The good oxidation resistance of Ti3AlC2 powder is attributed to the oxidized products of TiO2 and Al2O3 grains formed a connected and dense protective layer on the particle surface at elevated temperatures.