This study investigated the influence of carbon source on the microstructure and water–oxygen corrosion behavior of Si–Y alloy modified SiC/SiC composites. The results indicated that incorporating a small-sized and diffusely distributed carbon source within the matrix not only facilitates the preparation of a highly dense matrix, but also enables a uniform dispersion of the reaction-generated SiC. Furthermore, with the assistance of residual Si–Y alloy, the dispersed SiC enhanced the matrix strength, leading to a stepwise fracture behavior of the composites. Yttrium silicate with a gradient structure formed around the dispersed SiC could effectively exert its water–oxygen corrosion resistance. After 100 h of water–oxygen corrosion test at 1300 °C, the flexural strength of the composites with this structure reached 416 MPa, with a retention rate of 85 %. Both bending strength and retention were found to be at a high level in the current research on matrix modification.