The defoliation properties of galvannealed coating, so-called powdering and flaking, in continuous galvanizing line were investigated by scanning electron microscopy, X-ray diffraction, roughness profiler and deep drawing test. Both aluminum content in molten zinc and galvannealing temperature were turned out to be critical factors on the microstructure and mechanical properties of galvannealed coatings. Below 0.135 wt% Al, coating surface composed of the mixture of granular d1p and columnar z phases. While, above 0.155 wt% Al, coating surface contained the mixture of granular d1p and pan-cake d1k phases. The appearance of brittle d1k phase approximately 10 μm in size can account for the high amount of defoliation during deep drawing test. The formation of relatively ductile z phase and thin G phase contributes to improve the press formability. The optimazation of the surface microstructure controlling the ratio of granular d1p and columnar z phases was important to reduce the powdering.