Ternary chromium aluminium nitride (Cr,Al)N coatings were produced by reactive magnetron co-sputtering technique at different nitrogen deposition pressures. Densified nanostructured coatings with grain size below 100 nm were obtained under critically controlled deposition conditions at low nitrogen partial pressures. The nanostructured coatings were generally of improved surface roughness and properties. Microhardness measurements showed that the coatings had much higher hardness than those of coarser grain sizes. It is believed that the refinement of the coating structure at low nitrogen pressures is associated with a larger number of atoms/molecules depositing on the substrate with higher energies, thus enhancing the adatom mobility and nucleated cluster formation in the coatings. The relationship between the grain size reduction and the deposition rate of the coatings was analysed.