Ceramic membranes are getting increased attention these days for filtration applications because of their unique characteristics, such as high chemical stability, excellent mechanical strength, low fouling rate and long life when compared to polymeric membranes. In the present work, monolithic ceramic microfiltration membranes having needle-shaped interlocking mullite crystals have been developed from China clay, AlF3.3H2O and Al2O3 powders. The AlF3.3H2O decomposes during the early stages of sintering and reacts with aluminosilicates to produce mullite whiskers by an in-situ vapour phase reaction in the presence of SiF4, HF, and H2O vapours. Effects of various factors, such as the sintering procedure, temperature and time, and the amount of AlF3.3H2O and Al2O3 powders added on the phase evolution, microstructure, and pore characteristics, have been studied. A detailed reaction mechanism leading to the development of the stiff interlocking network of the mullite crystals is also explored. The addition of Al2O3 powder into the clay-AlF3.3H2O powder mixture increased the strength of the porous network by consuming the glassy silica phase in the matrix to form mullite crystals at high temperatures. The membrane made from clay + 40 wt.% AlF3.3H2O powder mixture with 10 wt.% Al2O3 by sintering at 1400 °C displayed excellent properties, with the apparent porosity of 64 %, median pore diameter of 0.3 µm, flexural strength of 43 MPa, and water permeance of 1031 L/m2.h.bar. The membrane also displayed excellent pore connectivity and chemical stability owing to the crosslinked needle-like mullite microstructure. The performance of the developed mullite microfiltration membrane in oil-in-water emulsion separation has been studied with three test solutions having oil concentrations of 200 mg/L, 500 mg/L and 1000 mg/L. The membrane showed excellent permeate flux and high oil rejection with all the feed concentrations. The developed mullite membrane also has a very low surface roughness value, which can enable the deposition of a mesoporous ultrafiltration layer directly over it. The fabrication of the present mullite membrane in comparison to the conventional asymmetric ceramic membranes is highly economical. Hence, this mullite membrane can be a cost-effective alternative for the microfiltration of contaminated water and also support for developing an ultrafiltration ceramic membrane.