The oxidation behavior of a Ferritic 10%Cr steel in Ar-H2O mixtures was investigated at temperatures between 550 and 650°C. The studies aimed at elucidating the effect of water-vapor content as well as the gas flow rate on the mechanisms of oxide-scale formation. It was found that, the oxide types and morphologies depend on time and exposure conditions. An important observation is that H2 produced by the reaction of water vapor with the steel can play a significant role in the oxidation process. First, it affects the possibility to form an external hematite layer and if the latter is not present, it tends to decrease the growth rate of the magnetite-base oxide scale. The extend by which the H2 affects the oxidation behavior depends on the gas-flow conditions, the water-vapor content and the exposure time.