Metal oxidation mostly involves significant volume change that cannot be accommodated by elastic deformation alone. Consequently, during the growth of oxide there are various elastic/inelastic deformation in the matrix, oxide, and slip along phase boundaries and grain boundaries. Due to the microstructural complexity, it is difficult to model inelasticity in oxidation from the dislocation level. Here we develop a mesoscale phase-field approach, based on Khachaturyan’s close-form solution for microelasticity, to solve the inelastic deformation coupled with mass transport and microstructure evolution. The model incorporates both classical J₂ plasticity and crystal plasticity to accommodate inelastic deformation of a polycrystal with interfacial sliding. The model is validated by a series of analytical solutions and by comparing with other numerical simulations. Finite deformation is approached by an incremental realization algorithm. The model is also applied to simulate incoherent interfaces and coherency loss. During internal oxidation, isolated oxide particles are usually coherent when they are small while they gradually lose coherency during the growth.