Microstructure, mechanical and functional properties of thin films often exhibit gradients at the nanoscale, which originate either from the nonuniform vapour deposition processes or were introduced in the film via external loads. Independent of their origin, resolving thin films gradients of interest needs characterisation tools operating with a spatial resolution at the nanoscale. These gradients of microstructure, residual and applied strains in hard protective thin films are the focus of this work, since they are critical to the performance of coated structures, such as coated tools used in the machining industry. Three model problems within thin film research were approached within this thesis, including (i) the nanoscale microstructure and residual stress gradients emerging from the deposition process in a thin film coated onto a cutting edge area, (ii) the nanoscale mechanical response against scratching and (iii) the in situ evaluation of the fracture response of thin films. Moreover, (iv) the thorough investigation of decomposition of thin films during annealing up to 1100°C, and finally (v) a self-assembled hierarchical thin film with a superior combination of mechanical and thermal properties is presented. In detail, the following characterisations on various thin films were performed: • Cross-sectional X-ray nanodiffraction was applied to access the nanoscale microstructure and stress gradients originating from the physical vapour deposition process in a TiN coating on a WC-Co cutting edge. While gradual and constant residual stress distributions with magnitudes between −1.4 and −2.4 GPa were found at the flank and rake faces, respectively, directly at the cutting edge a pronounced lateral and cross-sectional gradient ranging from 0 to −3 GPa was evaluated from the X-ray data. • 50 nm X-ray nanodiffraction and alectron microscopy were applied to characterize the nanoscale stress gradients and microstructural changes across the scratch track area of a brittle-ductile Cr/CrN thin film on a high speed steel substrate. After scratching, the formation of severe nanoscopic gradients of in-plane, out-of-plane and shear stress distributions were revealed in Cr and CrN, ranging from -6 to 1.5 GPa. These stress gradients were accompanied by and correlated to irreversible microstructural changes, such as either intergranular crack formation and transgranular defects, or crystallite bending and uniaxial gliding in CrN and Cr, respectively. • The fracture response of a notched clamped cantilever composed of four alternating Cr and CrN layers on high speed steel was evaluated by in situ cross-sectional X-ray nanodiffraction. The residual stress distributions in the notched Cr layer result in an effective stress intensity factor of 5.9±0.4 MPam½ and a pronounced stress concentration and a plastic zone around the notch. At a critical stress intensity of 2.8±0.5 MPam½, crack growth occurred up to the adjacent CrN-Cr interface, where the crack was arrested. • The stress-controlled decomposition routes of three AlCrN thin films have been assessed by the newly developed in situ high-temperature high-energy grazing-incidence-transmission X-ray diffraction method. Whereas the decomposition temperatures of the metastable cubic Al0.7Cr0.3N phase ranged from 698-914°C, the residual stress level of ~-4.3 GPa was similar for all three investigated thin films. • A TiAlN thin film composed of 6 hierarchical levels and mimicking biological materials, such as nacre or enamel, was synthesized by chemical vapour deposition, by alternating two variants of chemical precursors. In such a way, an irregular multilayer stack was formed by bottom-up self-assembly, consisting of hard herringbone stacks separated by interlayers of spherical nanograins. It exhibits superior functional properties and represents a milestone in the field of synthesis of protective wear resistant thin f