This paper is a review of the thermal stability of state-of-the-art transition metal nitride thin films synthesized by physical vapour deposition techniques. Nitrides are successfully applied as wear-protection coatings for tools and mechanical components, decorative coatings, electrical contacts, and diffusion barriers in electronic devices. The aspects for thermal stability are on phase equilibrium, metal, nitrogen and impurity diffusion, recrystallization, phase separation, interfacial reactions, and oxidation. Microstructurally engineered structures are considered including single-crystals, nanolaminates, metastable alloys, and films in a state of compressive intrinsic stress. Titanium nitride is discussed in detail as a model system for the studies, but results are given also for NbN, AlN, BN, CNx, CrN, TiN-TiB2, Ti(C,N), and (Ti,Al)N films. More than 150 references are included. (C) 2000 Elsevier Science Ltd. All rights reserved.