Abstract: FeSiCr-based soft magnetic composites (SMCs) have the important applications in the field of power electronics due to the high saturation magnetization, excellent DC bias characteristics, and good environmental stability. However, the traditional insulating process struggles to balance high permeability and low loss characteristics under high-frequency and high-power conditions. To address the challenge, the interfacial reaction engineering strategy based on high-temperature oxygen release induction was proposed in this study. The MnO insulating layers with oxygen vacancies (Vo) were constructed on FeSiCr soft magnetic powders through the decomposition of manganese acetate precursor during hot-press sintering. By combining the kinetic analysis of interfacial reactions, the mechanism of Cr₂O₃·SiO₂·MnO composite insulating layer formation via MnO-V_O/FeSiCr interfacial reactions during hot-press sintering was revealed. The effect of sintering temperature (800～1100 ℃) on the microstructure evolution and magnetic properties of FeSiCr/Cr₂O₃·SiO₂·MnO composites was systematically investigated. It is found that MnO promotes the directional oxidation of silicon and chromium at different sintering temperatures, forming the composite-structured Cr₂O₃·SiO₂·MnO insulating layers. This unique interfacial structure enables the composites to exhibit the low loss (1282.3 kW·m⁻³), high permeability (32.9), high saturation magnetization (190.7 emu·g⁻¹), and permeability stability (71% @ 65 Oe) at 30 mT and 500 kHz.