Abstract Residual stresses develop in coatings during deposition and can have a large impact on coating mechanical properties and durability. In this study, in-plane residual stresses in Electron beam–physical vapor deposited (EB–PVD) thermal barrier coatings (TBCs) were characterized by the change in substrate curvature upon coating removal, and in-plane elastic moduli were measured from the resonant frequency of the coating–substrate system. Variations in deposition conditions were observed to produce in PVD TBCs a wide range of stress levels, between −70 and 20 MPa. The residual stress was observed to be correlated strongly with the in-plane elastic modulus. A significant difference in the in-plane elastic modulus was measured along different directions of PVD TBC specimens fabricated by rotating the specimens over the evaporation source. The elastic modulus in the direction perpendicular to the axis of rotation was always significantly lower than the modulus measured along the axis of rotation. The elastic modulus measured perpendicular to the axis of rotation was associated with compliant microstructural features produced by the rotation of the substrate over the melt pool. Strain tolerance was measured directly by a new mechanical test that measured the strain at delamination of a coating from an edge-initiated crack from a substrate that was loaded in compression. The strain tolerance of the coating decreased with increasing residual stress.