This work investigates the variation in surface and sub-surface characteristics of the AlTiN coated tools in comparison to the micro abrasive blasted AlTiN coated tools. The coatings were deposited through a newly developed hybrid technique that combines the benefits of the two conventional physical vapour deposition techniques. The coated inserts were subjected to micro abrasive blasting (MAB) at 0.1 MPa and 0.2 MPa blasting pressure using alumina (Al2O3) abrasive grains. The physical, metallurgical and mechanical properties of the AlTiN films were studied using various characterization techniques. The deposited film is free from surface defects like holes or pores. MAB of these films lead to surface flattening at localized sites leading to the film surface uniformity. The impact of hard abrasives onto the film surface has also improved subsurface properties along with an escalation in the surface roughness value. Nano-indentation results showed that the nano-hardness exhibited by the AlTiN coated tools subjected to micro blasting is high, around 35 GPa, in comparison to only coated samples, which show a value of around 29 GPa. MAB of films also resulted in an improvement of film crystallinity. These results indicate that the micro blasted films have improved properties and hence may be more beneficial in enhancing the machining performance of the tools.