Inhomogeneties in the microstructure of 'Chrome-Moly' ferritic steels have been found to cause difference in the morphology, composition and rate of oxidation. Scales of different compositions and thicknesses formed in microstructurally different regions may also be different with respect to their physical instability, viz., cracking and spallation. Acoustic emission (AE) monitoring has been used to confirm the difference in initiation and intensity of the cracking and spallation of the scales over the regions with different microstructures in 9Cr-1Mo and 2.25Cr-1Mo steels. As indicated by in-air thermogravimetric (TG) tests at 973 K, the oxide scale on 9Cr-1Mo steel with 0.26% Si and fine grain size (90µm) suffered a pronounced weight-loss after about 60 min., where as the scale on the coarse grain (360µm) steel suffered weight-loss only after 240 min. AE monitoring under identical conditions suggest sudden and pronounced increase in AE activity after the respective durations in the two cases. Hence, the weight losses in both cases have been ascribed to spallation of the oxide scale. As suggested both by TG and AE tests, onset of pronounced scale spallation is considerably delayed in the case of the steel with a higher (0.75%) Si- content. Hence it is concluded that increase in Si-content and grain size of 9Cr-1Mo steel improves spallation resistance at high temperatures. This paper also includes the proposed mechanism of influence of Si content and grain size on spallation, well-evidenced by scanning electron microscopic observations. The cracking/spallation, have been observed in the area adjoining the steel grain boundaries, and hence can act as notches which may facilitate mechanical failures of the steel during elevated temperature application. During TG tests in air at 873 K, the weld metal region cut out of the weldment of 2.25Cr-1Mo steel have been found to suffer spallation whereas other regions, the base metal and the heat affected zone (HAZ), do not indicate spallation. AE monitoring has confirmed the spallation of scale in this region.