Alumina-forming austenitic (AFA) steel with high creep strengths and excellent high-temperature corrosion resistance has a promising potential being applied to high-temperature components of ultra-supercritical power plants. The effect of Cu addition on microstructure and tensile properties of Fe–20Ni–14Cr alumina-forming austenitic (AFA) steel after aging at 973 K has been investigated using various morphology microscopic characterizations and tensile test. The obtained results show that Cu addition promotes the formation of nanoscale B2–NiAl phase in AFA steel, which further increases the tensile strength and ductility of the materials to 1464 MPa and ductility of 23.81%, respectively. By occupying Fe and Ni atoms locations in the nanoscale B2–NiAl phase of AFA steel, Cu atoms reduce the chemical driving force of the nanoscale B2–NiAl phase growth. Such phenomenon results in reduction of the corresponding phase formation energy, and thus improves the phase stability. The occupancy behavior of Cu and its effect on the particle size in nanoscale B2–NiAl phase were quantitatively evaluated by first-principle calculation. The present research work proves that the precipitation strengthening plays a dominant role in the yield strength improvement of AFA steel.