Thermal and plasma based heat treatments of Aluminized P91 steel under different environments such as 100%O2, 100%Ar and 50%O2+50% Ar are attempted to investigate microstructural defects. Heat treatment of Al coated P91 steel involving normalizing treatment at 980°C and tempering at 750°C for 0.5h and 1.5h respectively in above mentioned environments under thermal and plasma processing conditions at 5mbar pressure was conducted. Detailed study of microstructural evaluation of the resultant diffusion coating under different environment is reported with SEM-EDS and EBSD characterization in current study. Further the vacancy concentration, CV was evaluated based on the precise combination of the changes in the bulk length and the X-ray lattice parameter from XRD data. The effect of vacancy concentration, grain size and strain on resultant coating has been presented. Presence of stable α-Al2O3 and metastable θ-Al2O3 along with FeAl was confirmed by XRD analysis in both thermal and plasma processed samples under 100%O2 and 50%O2+50%Ar environment while in Ar environment minor presence of θ-Al2O3 was observed during plasma treatment. Plasma heat treatment under 50%O2+50%Ar environment results in coating with stable α-Al2O3 followed by diffusion zone of FeAl with lowest vacancies, residual strain and area fraction of kirkendall porosity with maximum length of diffusion zone of FeAl phase for aluminized P91 steels than plasma treatment under 100% Ar environment and 100% O2.