Yak butter’s high unsaturated fatty acid level predisposes it to oxidation, hence must be converted into more stable forms like powder. This study aimed to spray dry yak butter using 10% yak butter and four sodium caseinate (NaCas) formulations: sample A: 100% NaCas; sample B: 50% NaCas, 50% lactose; sample C: 75% NaCas, 25% lactose; and sample D: 25% NaCas, 75% maltodextrin. The powders were vacuum and hermetically sealed, and evaluated for oxidative stability, physical and sensory properties during storage at 65 ℃ for 30 days. The results showed that samples B and D had similar and most favorable physical properties (such as, moisture, water activity, particle size, bulk density re-dispersion time, and encapsulation efficiency); though sample B, together with sample C, browned the most during storage. The majority of the sensory panelists preferred samples B and D; observed high caking in samples C and B; and the least whiteness loss and caking in samples D and A but high off-flavors in samples A and C. After storage, peroxide and thiobarbituric acid values of powder samples ranged from 34.98 to 69.54 meqO2/kg and 1.85–9.43 mg MD/kg, respectively, in the decreasing order of A, C, B, and D. Sample D, followed by B, showed the highest radical scavenging activity. Therefore, for optimum yak butter powder physical properties and oxidative stability, 50%:50%, NaCas: lactose, and 25%:75%, NaCas: maltodextrin formulations should be used. This study provides essential knowledge for butter powder processors.