Steered arc ion plated TiN, (Ti50, Al50)N, (Ti85, Nb15)N and Ti(C60, N40) coatings were heat treated in an inert argon atmosphere at temperatures up to 900-degrees-C. The hardness, Young's modulus and plasticity of the coatings were measured with nanoindentation after heating. As the coatings were annealed at higher temperatures, the hardness decreased and the plasticity increased. X-ray diffraction of the coatings showed that this corresponds to a decrease in internal stress and a change of crystallographic texture. The nanohardness of the cutting edge of coated drills was also measured after these were used in AISI 4140 steel. Scanning electron microscopy demonstrated the presence of a silicate layer located near the cutting edge of (Ti85, Nb15)N coated drills. Nanoindentation showed that the mechanical signature of the surface film further away from the cutting edge corresponded to a heat-treated coating covered with an oxide layer.