The microstructure evolution and compositional variation of Ti3SiC2 cathode surfaces during reactive cathodic arc evaporation are presented for different process conditions. The results show that phase decomposition takes place in the near-surface region, resulting in a 5–50 μm thick converted layer that is affected by the presence of nitrogen in the deposition chamber. This layer consists of two different sublayers, i.e., 1–20 μm thick top layer with a melted and resolidified microstructure, followed by a 4–30 μm thick transition layer with a decomposed microstructure. The converted layer contains a polycrystalline TiCx phase and trace quantities of Si-rich domains with Ti5Si3(C) at their interface. The arc discharge causes Si redistribution in the two regions of the layer, whose Si/(Ti+Si) ratio is higher in the top region and lower in the transition region compared to the virgin material.