This work presents theoretical demonstration of two-dimensional electron gas (2DEG) at the interface between Al0.2Ga0.8N and 4H-SiC, based on the self-consistent solution of Schrödinger–Poisson equations. High sheet carrier density of 1.1×1013 cm-2 was obtained in the Al0.2Ga0.8N/4H-SiC heterostructure, which is comparable to the electron concentration in Al0.2Ga0.8N/GaN heterostructure. The current–voltage characteristics of a high-electron-mobility transistor (HEMT), based on the Al0.2Ga0.8N/4H-SiC heterostructure, show a saturated drain current of 1.5 A/mm at the gate voltage of 2 V and the transconductance of 194 mS/mm at -3.95 V. In spite of interface-roughness scattering and phonon scattering, the 2DEG at the AlxGa1-xN/4H-SiC interface exhibits high electron mobility values of 3365 cm2/ (V·s) at 77K and 1120 cm2/ (V·s) at 300K. These results indicate that AlxGa1-xN/4H-SiC heterostructure can significantly improve the mobility of SiC based power switching devices.