Nickel aluminide coatings were produced on steel substrates by reactive thermal processing of pre-plated precursor layers of nickel and aluminum using plasma arc as the heat source. Controlled rapid heating melted the outer aluminum layer, which then dissolved nickel to facilitate the nucleation and growth of a nickel aluminide. The resultant coating microstructures varied from a duplex or triplex structure, consisting of either NiAl3 and a eutectic; Ni2Al3, NiAl3 and a eutectic; to a fully monolithic Ni2Al3 structure, with the latter resulting at high heat input rates and/or low heat-source traverse rates. The temperature of the reaction layer was simulated for the experimental conditions by a numerical model based on Green's function analysis. The nickel concentration at the liquid-solid interface just before any nickel aluminide nucleation was calculated by assuming local equilibrium interface conditions between the liquid layer and the fcc nickel-rich solution. The depth of nickel dissolution, which consequently determines the extent of nickel aluminide growth, was also predicted by the model. Numerical results of the nickel dissolution compared well with experimental observations.