Insulation cladding through interfacial reaction engineering is an important way to optimize the properties of soft magnetic composites (SMCs), but the traditional method faces the problem of lattice mismatch between the insulating layer and soft magnetic powder leading to interfacial cracks. In this study, a carbonyl iron powders (CIPs) doping strategy is innovatively proposed to construct CaSiO3?Ca2Al2O5?CaO composite insulating layer by utilizing their high plasticity and high specific surface area properties in synergy with the thermal decomposition of alkaline compounds. The results show that Ca(OH)2 decomposes into solid-phase CaO and gas-phase H2O during thermal treatment, where CaO tends to nucleate on the surface of FeSiAl soft magnetic powder matrix and grows along the doped CIPs, ultimately forming a composite insulating layer composed of CaSiO3?Ca2Al2O5?CaO. The combination of high plasticity CIPs and the cladding layer effectively fills the internal pores of the SMCs. The high specific surface area of the small particle size CIPs provides more reaction sites for the decomposition of Ca(OH)2 and the growth of the composite insulating layer, which promotes the uniform distribution of the insulating layer on the surfaces of the soft magnetic powders and the CIPs, and realizes the effective doping of the CIPs inside the insulating layer, which weakens the negative impacts of the lattice mismatches between the insulating layer and the soft magnetic powders. The negative effect of the lattice mismatch between the insulating layer and the soft magnetic powder is weakened. By changing the doping amount of CIPs, the magnetic properties of SMCs can be precisely regulated, and when the doping amount of CIPs is 20wt%, the SMCs show the best comprehensive magnetic properties. At 10 mT, 200 kHz, the saturation magnetization intensity reaches 145.1 A?m2/kg, the permeability is 40.5, and the loss is as low as 50.6 kW/m3, which is ideal for high-performance electromagnetic components. Compared with other insulating layer preparation strategies based on interfacial reaction engineering, the method proposed in this study takes advantage of the high plasticity and high specific surface area of CIPs, and the combination with interfacial reaction engineering is expected to be a new idea for solving the lattice mismatch between insulating layers and soft magnetic powders, which provides an ideal solution for performance optimization of SMCs.