In most coating applications damage resistance is controlled by the mechanical properties of the coating, interface and substrate. For electronic and optical applications the design of coating-substrate systems has been predominantly controlled by their functional properties but more recently the mechanical response of the system has been used to enhance functional properties, as in the case of strained silicon/SiGe microelectronic devices where tensile strain has been used to enhance mobility and increase device speed. As coatings become more complex, with multilayer and graded architectures now in widespread use, it is very important to obtain the mechanical properties (such as hardness, elastic modulus, fracture toughness, etc.) of individual coating layers for use in design calculations and have failure-related design criteria which are valid for such multilayer systems. Nanoindentation testing is often the only viable approach to assess the damage mechanisms and properties of very thin coatings (<m) since it can operate at the required scale and provides fingerprint of the indentation response of the coating/substrate system. If coating properties are to be assessed, the key point is to ensure any measured value is free from the influence of the deforma-tion of the substrate or lower coating layers. Finite element analysis of indentation load displace-ment curves can be used to extract materials properties for design; as coating thicknesses decrease it is observed that the yield strength required to fit the curves increases and scale-dependent materials properties are essential for design. Since plasticity is less likely, non-linear elasticity is increasingly important as the size of a nanostructure is reduced. Similarly the assessment of fracture response of very thin coatings requires modeling of the indentation stress field and how it is modified by plas-ticity during the indentation cycle. An FE approach using a cohesive zone model has been used to assess the locus of failure and demonstrates the complexity of adhesive failure around indentations for multilayer coatings. Finally the mechanical design of a metallization stress sensor based on na-noindentation-derived materials properties, non-linear elastic and plastic behavior and the treatment of geometrical non-linearities (stress stiffening) is discussed.