Soft magnetic composites (SMCs) play a crucial role in electronic devices owing to their high saturation magnetization. However, conventional insulation methods employed in SMCs exhibit inadequate insulation reliability, thereby restricting their further application in high frequencies. In this study, hydrothermal oxidation is introduced for insulation coating in the preparation of FeSiAl SMCs. When treated at 150 ℃ for 2 h, an insulation layer comprising of Al2O3, SiO2, Fe3O4 and Fe2O3 is formed on the surface of FeSiAl. The most optimal sample is achieved with saturation magnetization of 134.3 emu/g, presenting no significant reduction in saturation magnetization compared to the untreated sample. Cut-off frequency exceeding 300 MHz, and power loss of 503.7 kW/m3 (@7 MHz, 5 mT) are also obtained. This study suggests that hydrothermal oxidation could be a dependable method for fabricating high-frequency SMCs.