It is widely accepted that oxygen will severely deteriorate the glass-forming ability (GFA) of an alloy. In this work, we report that the GFA of a Fe76Si9B10P5 glassy alloy can be significantly improved (the critical diameter for fully glass formation is increased from 1 to 3 mm) under oxygen casting atmosphere. Furthermore, the pressure of oxygen atmosphere gives an obvious enhancement in the critical diameter of Fe76Si9B10P5 glassy alloy. A dependence of GFA on casting atmosphere species (argon, nitrogen, air, and oxygen) is also observed for this glassy alloy, and its critical diameter is 1, 1.5, 2.5, and 3 mm, respectively. In addition, the Fe-based glassy alloy exhibits excellent soft magnetic properties regardless of the applied casting atmosphere. The mechanism for such an unusual oxygen effect on the GFA of Fe76Si9B10P5 glassy alloy is attributed to the reduced nucleation rate caused by the enhancement of surface tension of the alloy melt.