The objective is to investigate the relationship between the composition, microstructure, and microhardness of TiC and TiN coatings prepared over a range of process parameters using the activated reactive evaporation process. The composition was measured by Auger electron spectroscopy. The phase relationships and preferred orientation were obtained by x-ray diffraction analysis. Microhardness and adhesion of the coatings were measured. The results show that the microhardness depends on the composition/stoichiometry, phases present, the preferred orientation, and possibly the grain size in the case of single-phase coatings.