In this work, we developed a new additive manufacturing paradigm, coaxial wire–powder-fed directed energy deposition (CWP-DED), to enable the fabrication of metals or composites with high manufacturing flexibility and efficiency. Herein, stainless steel (SS) 316L was selected as a representative material to validate the feasibility of CWP-DED process. Effects of feed rates on the melt pool temperature during the CWP-DED process were investigated using experimental and analytical approaches. Thermal contributions of fed wire and powders to the melt pool were involved in the analytical model to predict the melt pool temperature. The experimental results from thermal imaging were also obtained for validation. Besides, we uncovered the evolution of solidification morphology and crystallographic texture with different combinations of wire and powder feed rates. Finally, the microhardness and tensile performance of different as-built parts were tested. The results showed that the powder feed rate played a more dominant role in determining the melt pool temperature than the wire feed rate. Melt pool temperature experienced an initial increase and then decrease with the powder feed rate. A fine microstructure was achieved at a low powder feed rate, producing higher microhardness and larger tensile strength. This paper revealed the relations among process, thermal variation, and microstructure of as-built metallic parts to well understand this novel DED process.