Fracture of Al-Al(2)O(3)-diamond-containing composite coating was investigated using rheological models for principal Hertzian contact of a sphere and a plate. The crystallographic and morphologic texture was characterized and the fracture resistance was measured using fracture mechanics. A rheological model of the composite coating was proposed and confirmed by in situ experiments. Examination of the composite coating showed a hardness value of 25 GPa (about 25% higher than for all alumina-based layer) and fracture resistance (about 50% higher than for a single oxide ceramic layer) as compared to prior alumina-based coatings on a soft substrate. Experiments revealed ultimate stresses and stress-strain modes of the coating. Diamond nanoparticles improved fracture resistance of all alumina-based layer. It is also thought that the composite coatings will have higher thermal conductivity, and thermal shock resistance than alumina-based layers. Such physical characteristics suggest a number of possible commercial applications for the composite coatings, particularly for wear-resistant and related applications. The higher hardness and toughness of the coatings make them very attractive as substitutes for alumina-based and other ceramic-based composite coatings in these applications.