Hard coatings based on ternary Ti–Al–N and Cr–Al–N are commercial products currently employed in many industrial applications due to their outstanding chemical and physical properties, including high hardness and toughness and thermal as well as chemical stability. In this chapter the current understanding of mechanisms relevant for the thermal and chemical stability of these coating systems will be summarized based on state-of-the-art experimental and computational data.Synthesized by low-temperature (substrate temperatures below 500 °C) plasma-assisted vapor deposition (PVD) techniques, ternary Ti1−xAlxN, Cr1−xAlxN, and related coatings form metastable solid solutions. Depending on the chemical composition (and the deposition parameters used, like substrate temperature, gas pressure, and ion bombardment), the coatings crystallize in a face centered cubic (fcc) NaCl-type (c) or a hexagonal close packed (hcp) wurtzite-type (w) phase. For the main engineering applications, the cubic modification is preferred due to the superior mechanical, tribological, and oxidation properties. For example, the hardness of as-deposited c-Ti1−xAlxN and c-Cr1−xAlxN coatings, with AlN content (x) close to its metastable cubic solubility limit of x ∼ 0.7, can be as high as 37 and 30 GPa, respectively. During thermal treatments above the deposition temperature (e.g., during cutting application), the coatings undergo various processes to reach equilibrium. While for single-phase cubic Ti1−xAlxN the decomposition into the stable phases c-TiN and w-AlN occurs across the formation of cubic Al-rich and Ti-rich domains, the decomposition of Cr1−xAlxN is driven by nucleation and growth of w-AlN as well as by the release of N2 starting at temperatures around 1000 °C. The combination of experimental (e.g., x-ray diffractometry, calorimetry, nanoindentation, scanning and transmission electron microscopy, and atom probe tomography) with computational (e.g., density functional theory and continuum mechanics) studies allows for identifying, describing, and understanding the mechanisms and processes that govern the thermally induced decomposition. Thermal stability is discussed for Ti1−xAlxN-based coating systems, while chemical stability is analyzed for Cr1−xAlxN-based coating systems. Furthermore, the influence of alloying elements such as Y, Nb, Ta, Zr, and Hf on the phase formation, structure, mechanical, and thermal properties of these ternary Ti1−xAlxN and Cr1−xAlxN coatings is discussed.