Ti-Al-N coating has been proven to be an effective protective coating for machining applications. Here, the differences of cubic Ti-Al-N coatings with a similar Ti/Al atomic ratio of 1 deposited by magnetron sputtering and cathodic arc evaporation have been studied in detail. Main emphasis was laid on the characterization of thermal stability and cutting performance. Both coatings during annealing exhibit a structural transformation into stable phases c-TiN and h-AlN via an intermediate step of spiondal decomposition with the precipitation of c-AlN, however, a difference in decomposition process. Compared to sputtered coating inserts, an increase of tool life-time by 42% is obtained by evaporated coating inserts at the higher speed of 200 m/min, whereas the similar cutting life is observed at the speed of 160 m/min. It is attributed to the better stability of evaporated coating due to its later structural transformation at elevated temperature. A post-deposition vacuum annealing of both coated inserts in their corresponding temperature range of spiondal decomposition improves their cutting performance due to an increase in hardness arising from the precipitation of coherent cubic-phase nanometer-size c-AlN domains. Additionally, the sputtered coating behaves in worse oxidation resistance due to its more open structure. These behaviors can be understood considering the difference in microstructure and morphology of as deposited coatings originating from adatom mobility of deposited particles, where arc evaporation technique with higher ion to neutral ratio shows higher adatom mobility. (C) 2011 Elsevier B.V. All rights reserved.