Optimization of the galvannealing for cutting-edge 3^rd generation AHSS requires detailed structural and chemical characterization. Alloying elements such as Si dramatically modify the steel surface, forming an oxide layer during pre-annealing, which suppresses the desired interfacial interaction. Progress is impossible without understanding the phases' interplay at the steel-coating interface. We investigated this area in high-Si (1.49 wt%) galvanized AHSS at different annealing times via TEM and revealed that while hot-dip galvanizing at 460 °C the surface oxide prevents the desired Fe-Al reaction and liquid Zn penetrating gaps in the oxide membrane forms a δ phase layer underneath. Located between the steel substrate and the oxide layer, the δ phase can grow during subsequent annealing due to incoming liquid Zn, while Fe diffusion into the coating is suppressed. The oxide film remains stable even after long-term annealing (120 s at 480 °C) separating the coating from the reaction zone. The growing δ layer interacting with the steel substrate consumes dissolved Si. Reaching a certain threshold concentration, supersaturated δ decomposes forming a δ matrix with Fe-Si-Al-based nanoprecipitates. Using EDX data, phase configuration was refined via Thermo-Calc by the Fe–Zn–Si–Al system simulation suggesting that nanoprecipitates are based on Al- and Si-rich type of α-Fe.