Thin hard coatings are commonly used to enhance the wear resistance of cutting, broaching and shaping tools for steel machining. PVD-processes used for deposition on various kinds of tools offer the opportunity to control the constitution and microstructure as well as residual stresses of the coatings by adjusting appropriate process parameters. Beside the microstructure the residual stress states strongly influence in-service performance of the coatings and are therefore important to assess and to correlate with process parameters. A special approach was employed to non-destructively determine the gradients of residual stresses and stress-free lattice parameters over, the thickness of graded PVD-Ti(C,N) wear resistant coatings by means of X-ray diffraction. To evaluate the mechanical properties of the coatings they were tested by recording load-indentation curves using spherical indenters to yield concentric cracking. Combining results from FEM-analyses of indentation tests with results of X-ray residual stress analyses the fracture-initiating radial stresses were determined and the mode-I fracture toughness of the coating material could be estimated using a simple fracture criterion.