AlTiN-Ni coatings with various Ni contents (0–3 at%) were deposited using cathodic arc evaporation. X-ray photoelectron spectroscopy, X-ray diffraction, scanning electron microscopy, transmission electron microscopy, a nanohardness tester, scratch-adhesion tester, and cutting tester were used to examine the microstructure, mechanical properties, and cutting performance of the coatings. The AlTiN coatings exhibited a columnar structure, while the AlTiN-Ni coatings exhibited a nanocrystal structure due to the formation of nc-AlTiN/Ni nanocomposite coatings. The nanohardness of the AlTiN-Ni coatings decreased from 26.2 GPa to 20.9 GPa as the Ni content increased from 0 to 3 at%. At an Ni content of 1.5 at%, the coating possessed a high toughness and sufficient adhesion strength; however, these dropped drastically for the AlTiN-Ni coating with 3 at% Ni owing to the presence of amorphous Ni. The results for the Inconel 718 turning indicated that the wear mode is adhesion at the rake face, abrasion and adhesion (built-up edge) at the flank face, and chipping at the cutting edge. Compared to AlTiN-Ni3 and AlTiN-coated tools, the lifetime of the AlTiN-Ni1.5 coated tool increased to 160% at a cutting speed of 40 m/min. This was attributed to less adhesion at the rake face and chipping at the cutting edge, due to the nanocrystal structure and higher toughness of the AlTiN-Ni1.5 coating.