The early stages of interface reactions between AlN and Ti thin films were investigated using x-ray diffractions, Auger electron spectroscopy, cross section transmission electron microscopy (XTEM), and high resolution XTEM. The AlN/Ti bilayers were deposited on a molybdenum substrate using reactive and nonreactive magnetron sputtering techniques. After deposition, the bilayers were heat treated for 1-10 h at 600 degreesC in a nitrogen atmosphere. Decomposition of the AlN layer took place at the AlN/Ti interface and its products, Al and N, reacted with Ti to produce a AlN/Al3Ti/Ti2N/Ti3Al/alpha-(Ti, Al)ss phase sequence. This phase sequence is not consistent with the Ti-Al-N phase diagram and is believed to be the outcome of the particular conditions that prevail in the thin film and correspond to a particular set of kinetic parameters. A model that explains the development of the phase sequence and predicts its evolution after prolonged heat treatments is put forward. The applicability of such a solid-state reaction technique for producing functionally graded coating for wear and corrosion resistance applications is discussed.