Residual stresses and microstructural changes during phase separation in Ti33Al67N coatings were examined using microfocused high energy x-rays from a synchrotron source. The transmission geometry allowed simultaneous acquisition of x-ray diffraction data over 360 degrees and revealed that the decomposition at elevated temperatures occurred anisotropically, initiating preferentially along the film plane. The as-deposited compressive residual stress in the film plane first relaxed with annealing, before dramatically increasing concurrently with the initial stage of phase separation where metastable, nm-scale c-AlN platelets precipitated along the film direction. These findings were further supported from SAXS analyses.