A study of the microstructure, thermal stability, nanoindentation mechanical properties, and residual stress evolution of nanolayered Mo–Si–N/SiC thin films as a function of vacuum annealing time and temperature is reported. Multilayers of Mo–Si–N (MoSi2.2N2.5) and SiC were deposited by magnetron sputtering from planar MoSi2 and SiC targets onto single crystal silicon wafers. The relative amount of both components was varied (12.5–50 vol. % of SiC) while keeping the bilayer thickness constant (12 nm), or the bilayer thickness was varied (6–24 nm) with constant Mo–Si–N to SiC ratio (25 vol. % of SiC). Mechanical properties were measured by nanoindentation on as-deposited films and films annealed in vacuum at 500 and 900 °C. Microstructure and thermal stability were examined by cross-sectional transmission electron microscopy, glancing angle x-ray diffraction and nuclear resonance broadening. Stress evolution induced by thermal annealing was determined by measuring optically the change in curvature of coated silicon beams. In the as-deposited state, all films exhibited an amorphous microstructure. At 900 °C SiC still remained amorphous, but Mo–Si–N had developed a microstructure where nanocrystals of Mo5Si3 were embedded in an amorphous matrix. The interface between Mo–Si–N and SiC was indirectly shown to be stable at least up to 41 h annealing at 1075 °C in vacuum. The potential of Mo–Si–N as a barrier layer against intermixing between nanolayered MoSi2 and SiC at 900 °C- - has been demonstrated. Hardness, modulus and residual stress followed the volume fraction rule of mixture of both constituents of the nanolayered Mo–Si–N/SiC structure. Consequently, by optimizing the volume fraction of the constituents, zero residual stress on a silicon substrate is possible after annealing. © 1999 American Vacuum Society.