It remains a popular question whether rare earth oxides encourage reinforcing phases to the uniform distribution in cermet coating to improve the mechanical properties. This study applied laser cladding to prepare the TiAl/WC/CeO2 MMC cermet coatings on the TC21 alloy substrate. The effects of CeO2 content on the phase composition, microstructure formation, evolution mechanism, and properties of cermet coatings were investigated. Results show that the incorporation of CeO2 did not change the phase of composite coating, but the shape of the TiC phase has a close relation to the CeO2 content. CeO2 enhanced the fluidity of the molten pool, which further encouraged the TiC/Ti2AlC core-shell reinforcement phase. With the increase in CeO2 content, the optimized coating contributed to homogenous microstructure distribution and fine grain size. Owing to the hard phases strengthening and dispersion strengthening effects of CeO2, the microhardness of the composite coatings was all significantly higher (almost 1.6 times) than that of the substrate. Importantly, the addition of CeO2 significantly improved the wear resistance of the composite coating. This work provides a certain reference value for the study of surface strengthening of key parts in the aerospace field.