Diffusion annealing has been performed to investigate the influence of diffusion parameters on the diffusion behavior of 3.2% Si-grain-oriented steel coated with Al using plasma vapor deposition (PVD). When Fe-Si steel sheets coated with Al-PVD were annealed at 1373 K, a single-phase solution of Al with uniform concentration was formed in α-Fe without intermetallic phases. It was confirmed that Kirkendall voids nucleate during interdiffusion between solid Al and Fe in the annealing process and volume fraction of Kirkendall voids decreased as the heating rate increased. Rapid heating (55 K/s) can prevent the formation of Kirkendall voids, possibly by reducing the time available for interdiffusion between solid Al and Fe. The results show that the alloying of 2 wt% Al was achieved without the formation of interme-tallic phases and Kirkendall voids, and that this alloy can increase resistivity and reduce eddy current loss. This was found to results in reduced core loss by ~10%.