In this study, Mo-based composite coatings with 1 wt.% of rare earth oxide (Y2O3) contents were successfully manufactured on AISI SS304 (stainless steel) by Argon shielded Arc (ASA) cladding method. The effect of Y2O3 on phase composition, microstructure, mechanical and tribological properties of Mo-based coatings were investigated by X-ray diffraction (XRD), Field emission scanning electron microscopy (FESEM) with energy dispersive X-ray spectrometer (EDS), Micro-Vickers hardness apparatus and Pin-on-disc type wear tester. The result demonstrates that the upper surface of composite coating with and without addition of Y2O3 were mainly comprised of TiB2, Ni3Ti, Fe3Mo, MoNi4, NiTi, Mo2B, Y2TiO7, and MoNi4 appeared. The constituent phase components in the coated layer were found to be beneficial for the enhancement of the microhardness and wear resistance. The maximum value of average micro-hardness and wear resistance was observed in samples having 1 wt.% of Y2O3 as a precursor. The average microhardness of Mo-based coatings with Y2O3 addition was in the range of 1599 to 2170.4 HV0.1 and wear resistance increases from 1.41 to 6.36× 10-8 g/N-m. The pronounced effect of Y2O3 addition on microhardness and wear resistance of coatings were consistent with the calculation results of applied multivariate statistical analysis. Thus, it can be concluded that addition of Y2O3 is effective and achievable way to solidate hardness and wear resistance of Mo-based coatings.