Reactive RF-magnetron sputtering is used to grow Cr0.28Zr0.10O0.61 coatings at 500 degrees C. Coatings are annealed at 750 degrees C, 810 degrees C, and 870 degrees C. The microstructure evolution of the pseudobinary oxide compound is characterized through high resolution state of the art HRSTEM and HREDX-maps, revealing the segregation of Cr and Zr on the nm scale. The as-deposited coating comprises cc-(Cr,Zr)(2)O-3 solid solution with a Zr-rich (Zr,Cr)O-x. amorphous phase. After annealing to 750 degrees C tetragonal ZrO2 nucleates and grows from the amorphous phase. The ZrO2 phase is stabilized in its tetragonal structure at these fairly low annealing temperatures, possibly due to the small grain size (below 30 nm). Correlated with the nucleation and growth of the tetragonal-ZrO2 phase is an increase in hardness, with a maximum hardness after annealing to 750 degrees C, followed by a decrease in hardness upon coarsening, bcc metallic Cr phase formation and loss of oxygen, during annealing to 870 degrees C. The observed phase segregation opens up future design routes for pseudobinary oxides with tunable microstructural and mechanical properties. (C) 2017 Acta Materialia Inc. Published by Elsevier Ltd. All rights reserved.