Toasting Coconut in the Oven. 1  1. Preheat the oven. Turn on the oven and preheat it to 350°F/176°C or 325°F/163ºC. 2  2. Prepare the baking sheet. Line a baking sheet with aluminum foil. 3  3. Toast the coconut. Put the baking sheet into the preheated oven.  4. Store the toasted coconut.