Nanoindentation produced plastic deformation of arc-evaporated AlCrSiN and AlCrSiON nanocomposite films deposited on cemented-carbide substrates was investigated. The nanoindentation tests have the maximum penetration depth of 250 nm. Microstructure evolution in the indents was indicated by focused-ion-beam cutting and transmission-electron-microscopy observation. The results indicate that both the AlCrSiN and the AlCrSiON nanocomposite films exhibit excellent plasticity without the occurrence of microcrack initiation and propagation in the indents and grain boundaries. The prominent pile-up phenomenon produced by plastic flow was observed in the indent of the AlCrSiON film. Incorporating O into the AlCrSiN reduces both hardness and toughness of the film. This produces the pile-up in the AlCrSiON film when exposed to a nanoindenter. Rotation of the (Cr, Al)N nanograins and deflection of self-organized multilayer interface contribute to the plastic deformation of the AlCrSiN. However, shear band, interface deflection, and grain rotation contribute to the nanoindentationinduced plastic deformation of the AlCrSiON film.