An abradable dry powder coating composition (20) for coating onto a piston assembly component (12) for subsequent curing to form into an abradable coating, including a powder (16) formed of uncured thermoset resin with at least 5 volume percent filler, wherein the filler does not substantially melt below the cure temperature of the resin. Method for making and coating the coating composition includes melt-mixing the thermoset resin with at least 5 volume percent of filler, cooling the resulting mass composite, and then breaking the cooled mass composite into powder particles (16). Method of coating an article with an abradable coating includes applying the dry composite powder with the filler therein onto the piston assembly component and curing the dry powder composition, preferably by electrostatic powder coating.