The preparation of suitable coating materials is crucial for enhancing the atomic oxygen erosion of zirconium alloys. Zr-Al-C ceramics composed of MAX phase have excellent inherited properties of metal and ceramic, making them useful as spacecraft materials for atomic oxygen protection. The MAX phases are a group of layered ternary compounds with the general formula Mn+1AXn (M: early transition metal; A: group A element; X: C and/or N; n = 1–3), which combine some properties of metals, such as machinability, low hardness and damage tolerance, with those of ceramics, such as high elastic moduli, high temperature strength, oxidation and corrosion resistance. In this paper, Zr-Al-C coatings were successfully prepared by the magnetron sputtering method. The macroscopy morphology, microstructure, adhesion and the effect of atomic oxygen of Zr-Al-C coatings were all investigated. The results showed the successful deposition of Zr-Al-C coatings consisting of Zr2Al3C4, Zr3Al3C5, and ZrAl3 phases on zirconium alloy surface by adding an intermediate layer using magnetron sputtering route. The adhesion between the coating and the substrate was estimated to 18 N by scratch testing. After 30 cycles of cold and hot impact tests, the Zr-Al-C coating remained undamaged without crack or peel off. The oxidation kinetics of ZIRLO with Zr-Al-C coating followed approximatively a linear variation law. The oxidation rate of ZIRLO containing Zr-Al-C coating was lower than that of uncoated Zr alloy within 30 h of atomic oxygen exposure. In other words, Zr-Al-C coating could protect Zr alloy under certain exposure dosage of atomic oxygen. Meanwhile, further increase in exposure time of atomic oxygen led to the formation of ZrO, ZrO2, Al2O3 on Zr-Al-C coating. Also, more pores appeared on Zr-Al-C coating surface due to the oxidation of carbon elements in the coatings to form volatile oxides, such as CO and CO2. As atomic oxygen erosion continued, the existing holes became connected to form complex channel-like labyrinthine two-dimensional network structures. The latter penetrated further the atomic oxygen into the interior of Zr-Al-C coating to continue the corrosion effect of atomic oxygen. By considering the protection effect of Zr-Al-C coating on Zr alloy under a certain exposure dosage of atomic oxygen, the protection time can be calculated and experiments can be designed according to the linear law obtained as a function of the thickness of Zr-Al-C coating. In sum, these results look promising for future application of MAX or MAX-like phase in spacecraft environment.