The dependence of decomposition routes on intrinsic microstructure and stress in nanocrystalline transition metal nitrides is not yet fully understood. In this contribution, three Al _0.7Cr _0.3N thin films with residual stress magnitudes of −3510, −4660 and −5930 MPa in the as-deposited state were in-situ characterized in the range of 25–1100 °C using in-situ synchrotron high-temperature high-energy grazing-incidence-transmission X-ray diffraction and temperature evolutions of phases, coefficients of thermal expansion, structural defects, texture as well as residual, thermal and intrinsic stresses were evaluated. The multi-parameter experimental data indicate a complex intrinsic stress and phase changes governed by a microstructure recovery and phase transformations taking place above the deposition temperature. Though the decomposition temperatures of metastable cubic Al _0.7Cr _0.3N phase in the range of 698–914 °C are inversely proportional to the magnitudes of deposition temperatures, the decomposition process itself starts at the same stress level of ~−4300 MPa in all three films. This phenomenon indicates that the particular compressive stress level functions as an energy threshold at which the diffusion driven formation of hexagonal Al(Cr)N phase is initiated, provided sufficient temperature is applied. In summary, the unique synchrotron experimental setup indicated that residual stresses play a decisive role in the decomposition routes of nanocrystalline transition metal nitrides.