A nano-composite coating was formed using nano-Fe2O3 as pigments in different concentrations, to a specially developed alkyd based waterborne coating. The nano-Fe2O3 based composite coatings were applied on mild steel substrate by dipping. The dispersion of nano-Fe2O3 particles in coating system was investigated by SEM and AFM techniques. The effect of addition of these nano-pigments on the electrochemical behavior of the coating was investigated in 3.5% NaCl solution, using electrochemical impedance spectroscopy (EIS). Coating modified with higher concentration of nano-Fe2O3 particles showed comparatively better performance as it was evident from R-po and C-c values after 30 days of exposure. In general, the study showed an improvement in the corrosion resistance of the nano-particle modified coatings as compared to the neat coating, confirming the positive effect of nano-particle addition in coatings. (C) 2009 Elsevier B.V. All rights reserved.