The technique of alloying X120Mn12 steel substrate by plasma transferred arc process was used for development of a surface having high wear resistance. High carbon ferrochromium, ferrotungsten, and nickel-aluminum intermetallic powders were combined to form M7C3 carbides inside Fe-based composite surface coating. The phase transformations on these coated surfaces were comprehensively examined by using a combination of scanning electron microscopy (SEM) with energy dispersive spectrometry microanalysis, differential thermal analysis and X-ray diffraction (XRD). The microstructure studies of the superficial layers of the coating revealed a phase mixture of interdendritic austenite () phase structure and fine eutectic M7C3 carbides. The new formed coated surfaces were investigated by change of alloying elements (Cr, W, Ni), size of dendrites, change of eutectic reaction temperatures, hardness, carbide volume ratio of hard phases, and coating thickness as the processing parameters (powder feed rate and heat input). The dry sliding wear tests were performed on a pin on disc machine. The wear rates of the tests were affected by the powder feed rate, powder type, and applied load. Results revealed that processing powder combination used in this study (FeCrC-FeW-NiAl) provided the best option with superior combination of properties on surface of X120Mn12 steel substrate.