Alloys of TiAl-Mn-(0, 5, 10)wt.% $Y_2O_3$ were prepared by a powder metallurgical route, and their oxidation behavior was studied at 800, 900 and $1000^{circ}C$ in 1 atm of air. The scale formed on the alloys consisted of $TiO_2$ and $Al_2O_3$ oxides. During oxidation, Mn tended to diffuse outward, whereas oxygen diffused inward. The dispersoids of $T_2O_3$, which segregated at the matrix grain boundaries, acted as a diffusion channel for cations and oxygen ions, nucleation sites for oxides, and vacancy annihilation sites. $T_2O_3$ increased the scale thickness, but improved the scale adherence.