Abstract A micromechanics analysis is carried out for delamination cracking in functionally graded coating/substrate systems. The FGM coating is taken to be a ceramic/metal composite with its thermomechanical properties changing with position in the coating along the thickness direction. Based on a linear fracture mechanics analysis, the energy release rate of the delamination crack is determined as a function of the coating gradation, the location of the crack, the thickness ratio of the coating/substrate system, and the elastic properties of the ceramic and metal phases. Formulae are given for the stress intensity factors and the mode mixity of the system. Buckling of the FGM coating due to compressive residual stresses is analyzed using a thin plate theory; the buckle-driven delamination is modeled accordingly. It is found that functional gradation of the coating can significantly reduce the fracture driving force of the delamination crack in both edge-delamination and buckle-driven delamination cases. A steady-state heat transfer analysis is performed for the FGM coating/substrate system; the increase of the coating thickness owing to the functional gradation is quantified.