A composite microstructure consisting of small α-Al2O3 particles dispersed in a β-NiAl coating matrix was synthesized by chemical vapor deposition (CVD). White the surface of a pure Ni substrate was being reacted with AlCl3 and H2 to form β-NiAl at a temperature of 1050 °C, the partial pressure of CO2 in the reactor was controlled via pulsing to nucleate and disperse 50 to 500 nm α-Al2O3 particles in the β-NiAl matrix. The relative amount of the α-Al2O3 phase increased with coating thickness as the rate of the β-NiAl formation decreased with time. These experimental observations suggest that the synthesis of a graded composite microstructure by the CVD method is feasible.