The thin film systhems ZrAlYN and ZrAlYON are studied in detail with respect to their morphology, phase composition and thermal stability. The films were deposited by unbalanced DC magnetron sputtering (a PVD technique). To obtain nitrides and oxinitrides, nitrogen and synthetic air was used as reactive gas during sputtering of the Zr-Al-Y cathods. The elemental composition was investigated with Energy Dispersive X-Ray (EDX) and Elastic Recoil Detection Analysis (ERDA). As detected by X-Ray Diffraction (XRD) and Selected Area Electron Diffraction (SAED) the nitrides consist of c-Zr(Y)AlN and h-Zr(Y)AlN phases. The oxinitrides contain the additional (gamma)-Al2O3 and t-ZrO2 phases. Cubic Y2O3 could only be detected for Y contents above 0.8 at%. Scanning Electron Microscopy (SEM) investigations showed dense and feature-less cross sections for all films investigated, which is typical for nanostructured materials. Whereas the nitride films show a coating thickness of 3.5 um the oxinitrides are 2.5 um thick, when using the same deposition time. The morphology, investigated by High Resolution Transmission Electron Microscope (HRTEM), showed a nanocrystalline structure with grain sizes of 7 to 15 nm for the nitride films. The oxinitrides exhibit a crystallite size of 7 to 12 nm. The crystallites are encapsulated in an amorphous boundary phase. The hardness decreases slightly with increasing Y content from 16.1 GPa (for the Y free film) to 15.5 GPa for the film with 3.4 at% Y. The oxinitride coatings start with a hardness value of 8.3 GPa which increases to 12.2 GPa for the coating with 10.4 at% Y. For the nitride films the effect of solid solution causes an increase in Youngs modulus from 194 to 208 GPa when increasing Y from 0 to 1.26 at%. At higher Y-contents the Youngs-modulus decreases again to 201 GPa as the Y-N bonds are softer. For the oxinitride films an increase in Youngs modulus from 150 GPa to a maximum of 170 GPa at 10.4 at% Y is observed. During differential scanning calorimetry (DSC) measurements several irreversible reactions (recovery, recrystallization, decomposition, phase transformation) occur for both systems in the temperature range 700-1450°C. The c-Zr(Y)AlN + h-Zr(Y)AlN phases of the nitrides decompose towards c-ZrN + h-AlN at around 1150°C. The additional (gamma)-Al2O3 phase in the oxinitride films transforms to (alpha)-Al2O3 at around 1200°C. These decompositions and phase transformations are connected with a mass loss, mainly due to release of nitrogen.