A bi-layer coating consisting of a TiAlCrN inner layer and complex carbon nitride (CN(x)) plus CrCN outer layer was deposited on to a high speed steel (M2) substrate via physical vapour deposition (PVD). Detailed microstructural analysis of the coating has been performed via transmission electron microscopy (TEM) and X-ray photoelectron spectroscopy (XPS). XPS analysis indicated that the outer layer contained both C-C bonds, associated with an amorphous phase, and the presence of CrCN, which was confirmed by TEM analysis. Localized deformation of the coating was performed using nanoindentation with a spherical indenter. Force-displacement curves of the indentation tests exhibited a number of 'pop-ins' during the loading cycle. indicative of cracking and other deformation events. Cross-sectional analysis of the indents revealed extensive cracking in the TiAlCrN layer and shear steps at the steel-nitride interface, consistent with the events observed in the force-displacement curves. On the other hand minimal cracking was observed in the CN(x) + CrCN layer. It is believed that the relatively ductile outer layer inhibits the propagation of cracks from the inner, brittle layer. Crown Copyright (C) 2009 Published by Elsevier B.V. All rights reserved.