Abstract Coatings of (AlxCr1−x)2+yO3−y with 0.51⩽x⩽0.84 and 0.1⩽y⩽0.5 were deposited on hard cemented carbide substrates in an industrial cathodic arc evaporation system from powder-metallurgy-prepared Cr/Al targets in pure O2 and O2+N2 atmospheres. The substrate temperature and bias in all the deposition runs were 575°C and −120V, respectively. The composition of the coatings measured by energy dispersive X-ray spectroscopy and elastic recoil detection analysis differed from that of the facing targets by up to 11%. Microstructure analyses performed by symmetrical X-ray diffraction and transmission electron microscopy showed that corundum, cubic or mixed-phase coatings formed, depending on the Cr/Al ratio of the coatings and O2 flow per active target during deposition. The corundum phase was promoted by high Cr content and high O2 flow per target, while the cubic phase was observed mostly for high Al content and low O2 flow per active target. In-situ annealing of the cubic coatings resulted in phase transformation from cubic to corundum, completed in the temperature range of 900–1100°C, while corundum coatings retained their structure in the same range of annealing temperatures. Nanoindentation hardness of the coatings with Cr/Al ratio <0.4 was 26–28GPa, regardless of the structure. Increasing the Cr content of the coatings resulted in increased hardness of 28–30GPa for corundum coatings. Wear resistance testing in a turning operation showed that coatings of Al–Cr–O have improved resistance to crater wear at the cost of flank wear compared with TiAlN coatings.