In the present work, the forming mechanism of oxide layer during wet oxidations is presented. There can be three kinds of stress sources that develop cracks in the oxide layer during oxidation. One is the volume change by oxidation, another is thermal expansion by the heat of oxidation, and the third is the gas pressure evolved. In this investigation, the surface oxidation mechanism of Fe-Si-B-Nb amorphous powder during wet oxidation treatment is studied by the analysis of the composition and magnetic domains of the oxide layer. Fe-Si-B-Nb amorphous powder used in this research is 53-75 mum in diameter; and the morphology of oxide layers can be controlled by changing oxidation treatment time. The phase and morphology of composing insulating layer of consecutive oxide layers is characterized by SEM, XPS, EDS, TEM and Lorentz TEM.