Abstract: FeSiCr-based soft magnetic composites(SMCs) have important applications in the field of power electronics due to their high saturation magnetization, excellent DC bias characteristics, and good environmental stability. However, the traditional insulation cladding process struggles to balance high permeability and low loss characteristics under high-frequency and high-power conditions. To address this challenge, this study proposes an interfacial reaction engineering strategy based on a high-temperature, oxygen-release-induced interfacial reaction. An MnO cladding layer with oxygen vacancies (Vo) was constructed on FeSiCr soft magnetic powders through the decomposition of a manganese acetate precursor during hot-press sintering. By combining kinetic analysis of interfacial reactions with thermodynamic principles, the mechanism of Cr2O3·SiO2·MnO composite insulating layer formation via MnO-Vo/FeSiCr interfacial reactions during hot-press sintering was revealed. The effect of sintering temperature (800-1100 °C) on microstructure evolution and electromagnetic properties of FeSiCr/Cr2O3·SiO2·MnO composites was systematically investigated. It was found that MnO promotes the directional oxidation of silicon and chromium at different sintering temperatures, forming a composite-structured Cr2O3·SiO2·MnO insulating layer. This unique interfacial structure enables the composites to exhibit low loss (1282.3 kW/m3), high permeability (μ = 32.9), high saturation magnetization (190.7 emu/g), and stable permeability (71% @ 65 Oe) at 30 mT and 500 kHz. The oxygen vacancy-modulated interfacial reaction mechanism established here provides a new paradigm for designing next-generation high-frequency, low-loss FeSiCr-based SMCs.