This study investigated the microstructural evolution and interdiffusion behavior of an AlCoCrFeNiY coating deposited on a Hastelloy-X superalloy substrate at 1050 °C, 1100 °C and 1150 °C, and compared it with a conventional NiCoCrAlY coating. Element interdiffusion behavior indicates that Al and Co diffuse inward from the coating to the substrate, while Ni and Cr diffuses outward from the substrate to the coating. However, the interdiffusion behavior of Fe is different in two types of coating/substrate systems, which results from the big difference in Fe concentration. The AlCoCrFeNiY coating undergoes extensive β to γ phase transformation than the NiCoCrAlY coating, and thermodynamic calculations suggest that Fe can dramatically extend the γ/σ two-phase region. This causes formation of a thicker β-depleted zone near the coating/substrate interface and more Cr-rich σ phase precipitates in the AlCoCrFeNiY/Hastelloy-X system. Based on thermodynamic calculations of the effect of Fe content on Y solubility and phase composition, as well as the chemical potential difference in Fe, a novel Ni23Co17Cr12Al10FeY coating is proposed to reduce element interdiffusion without sacrificing oxidation resistance.