Nanocrystalline films with high hardness have attracted increasing interest for wear resistant applications. Specifically, nanocrystalline Ti–B–N layers have been demonstrated to exhibit enhanced hardness and thermal stability. Here, we show that Ti–B–N films grown at 300°C and consisting of a high volume fraction, ∼50%, of a fully percolated disordered phase encapsulating 2–3nm wide TiN and TiB2 grains, have a hardness of 37GPa and an elastic modulus of 332GPa which increase with annealing to 43 and 362GPa, respectively, at Ta=800°C. The structural rearrangement which occurs during annealing results in the formation of compact interface boundaries which lead, in turn, to the observed hardness increase. Annealing at Ta>900°C decreases the hardness, although the elastic modulus continues to increase, due to the combination of grain growth and B loss via the formation of volatile boron oxides and hydroxides. These conclusions, obtained based upon a combination of x-ray diffraction, nanoindentation, electron probe microanalysis, and transmission electron microscopy, are corroborated by calorimetric investigations. The overall results provide insight toward developing “design rules” for high-temperature superhard nanoscale based coatings.