From the 1980’s a theory named “the sulfur effect” has been applied to explain the scale adhesion and the reactive-element effect (REE) during high-temperature oxidation. It claims that the bond between the oxide scale and the metal substrate is intrinsically strong and that impurity sulfur in the metal segregates at the oxide scale/substrate interface and weakens the bond, and that REs getter the sulfur impurity and prevent it from segregating to the interface. In the present study, a cast polycrystalline sulfur-containing Fe–25Cr–5Al-1S (wt.%) alloy and its magnetron-sputtered nanocrystalline coating were oxidized at 1000°C, and the specimens were examined by XRD and SEM. The scale formed on the cast alloy was cracked and detached from the substrate even after isothermal exposure, and obvious sulfur enrichment was detectable at the scale/substrate interface. While, the scale formed on the nanocrystalline coating was very adherent after 100 cycles oxidation. Here, sulfur was preferentially distributed in the outer scale and internal oxides rather than at the scale/substrate interface. These results provide evidence that nanocrystallization can prevent sulfur segregation at the scale/substrate interface, hence enhance scale adhesion.