Coatings play an important role in a variety of engineering applications, protecting metallic or ceramic substrates against oxidation, heat penetration, wear and corrosion. Conventional coatings, which usually consist of one or two homogeneous layers deposited on a substrate, are susceptible to cracking and debonding due to the mismatch of thermomechanical properties between the coating and the substrate. To increase resistance of coatings to functional failure, the concept of a functionally graded material is being actively explored in coating design. One of the possible ways to eliminate the mismatch of material parameters between the coating and the substrate is to introduce a functionally graded interlayer between the substrate and the top coat. This paper investigates elastic deformation of coated plates with and without a functionally graded interlayer in the context of three-dimensional elasticity, assuming the Young's modulus of the interlayer varies exponentially through the thickness. It is shown that the use of the functionally graded interlayer in plates subjected to transverse loading eliminates discontinuity of the in-plane normal stress across interfaces without increasing the stress magnitude at the top surface of the coating. (c) Koninklijke Brill NV, Leiden, 2009