AlN/TiN multilayer coatings were synthesized by sputtering Al and Ti metal targets simultaneously in an Ar+N-2 plasma using a dual-cathode unbalanced de magnetron sputtering system. Two different power sources, rf and pulsed-de, were employed for substrate bias. It was found that under a critical thickness for the AW layer, the AlN/TiN coating with the AlN layers below a critical thickness exhibit a highly textured [111]-oriented superlattice structure. However, the rf-biased films have poor mechanical properties. Transmission electron microscopy (TEM) studies of the rf-biased films show columnar structure of large grains with weak links (amorphous-like material) between different columnar grains. In the pulsed-de-biased films, however, we noticed a twofold increase in hardness, when the bilayer thickness is under similar to 5 nm. The increase of the hardness coincides with the structure phase transition from a randomly oriented polycrystalline AlN/TiN thin film to a highly [111]-textured AlN/TiN thin film. X-ray diffraction and TEM studies indicate that in the highly [111]-textured multilayer films, AlN is in a nanostabilized cubic form. The critical thickness for AlN to form a nanostabilized cubic structure along [111] is less than about 2.5 nm. TEM studies on the highly textured films deposited with pulsed-de bias showed a coherent growth of an AlN/TiN layered structure across the film and highly dense grain boundaries, which was achieved by using the low-energy ion bombardment induced by the pulsed-de bias. The high hardness value of the coating with small bilayer thickness deposited with pulsed-de bias is not only due to the formation of the nanometer-scale multilayer structure and nanometer-stabilized cubic form of AlN, but also due to the strongly bonded high-angle grain boundaries between different columnar grains.