Coated cutting tools are disclosed which have a hard coating that includes at least one aluminum titanium nitride layer having a single phase structure of B1 cubic phase and a composition of (AlxTi1-x)N, where x is in the range of about 0.46 to about 0.52 moles. The hard coatings also have a residual stress in the range of from about −0.4 to about −3 GPa as measured by the XRD Sin2 Ψ method, and a crystallographic orientation characterized by an x-ray diffraction (200) to (111) peak intensity ratio in the range of about 1 to about 14. Preferably the aluminum titanium nitride layer has an average crystallite size in the range of about 15 to about 50 nanometers. Methods of making such coated cutting tools are also disclosed.