The corrosion protection and electrochemical mechanism of solvent-borne alkyd composite coating containing 1.0 wt.% polyaniline (PANI) and 1.0 wt.% CeO2 nanoparticles (NPs) for carbon steel in 3.0 wt.% NaCl solution were investigated by means of scanning electron microscopy (SEM), ex-situ, in-situ and electrochemical controlled (EC) atomic force microscopy (AFM), open circuit potential (OCP) and electrochemical impedance spectroscopy (EIS) methods. The SEM and ex-situ AFM results revealed the micro- and nanostructure of the composite coating. The in-situ sequential AFM images and line profiling analysis indicated electrochemical activity of the NPs and a high stability of the composite coating in NaCl solution. The results of EC-AFM combined with cyclic voltammetry (CV) demonstrated volume change of the PANI NPs upon reduction and oxidation at certain applied potentials on the coating. The redox reactions between the different forms of PANI and the effect of the CeO2 NPs on the polymerization of the composite polymer were further confirmed by infrared reflection absorption spectroscopy (IRAS). The OCP and EIS results revealed that the composite coating provided an improved corrosion protection for carbon steel within several days of exposure, which was attributed to the barrier protection of CeO2 NPs and the passivation ability of PANI.