Transition metal-based alloy nanostructures have emerged as promising catalysts for electrochemical water splitting, offering a potential solution to the growing demand for clean and renewable energy. Also, research on encapsulation engineering of alloy nanostructures using carbon matrices has recently advanced, presenting a new approach that combines the conductive properties of carbon matrices with an alloy structure to enhance electrochemical performance in water splitting. However, the specific roles of the alloy core, carbon shell, and their synergistic effect in improving electrochemical performance are still not well understood. In this paper, we report on the encapsulation of a ternary Co–Fe–Al alloy nanostructure using a carbon matrix and investigate its electrochemical oxygen evolution reaction (OER). The optimized carbon matrix-encapsulated Co0.3Fe0.2Al0.5 alloy catalyst demonstrated superior electrocatalytic activity for OER (achieving 250 mV at 10 mA cm−2) and long-term stability. Through density functional theory calculations, we also elucidate the crucial role of Al in enhancing the OER catalytic performance of the proposed carbon-encapsulated Co–Fe alloy catalyst. By comparing the free electron concentration and required applied potentials to trigger OER, we provide insights into the beneficial effects of incorporating Al into the Co–Fe alloy catalyst.