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Cemented tungsten carbide and polycrystalline diamond are the most critical materials used for roller cone bit cutting structure. Chipping and catastrophic breakage are the primary failure modes for the materials and hence the limiting factor of service life of a drill bit. Chipping and fracture resistance can be improved at the expense of hardness and wear resistance of the materials. This trade-off between wear resistance and chipping resistance hinders the development of super hard materials for demanding drilling applications. Functionally designed composite materials of polycrystalline diamond (PCD) and cemented tungsten carbide (WC-CO) that offer enhanced chipping resistance without significantly sacrificing wear resistance are studied and reported in this presentation. Specifically, one example of the functionally designed composite materials is a honeycomb structured composite of polycrystalline diamond (PCD) and WC-Co and its application for diamond enhanced inserts for roller cone bits. The PCD/WC-Co composite takes advantages of high modulus and superior wear resistance of diamond, while it mitigates chipping and cracking using the tougher WC-Co as cell boundaries. The overall engineering properties and performance are superior to that of pure PCD. Another example of functionally engineered hard materials is double cemented (DC) tungsten carbide. Double cemented tungsten carbide has 50% or higher fracture toughness than conventional cemented tungsten carbide at equivalent wear resistance. When compared to tool steels, DC carbide has equivalent fracture toughness but much higher wear resistance. Field tests of honeycomb structured diamond enhanced inserts (CDEI) demonstrated the controlled chipping characteristics and longer durability of components as compared to conventional homogeneous PCD materials with comparable wear resistance. DC carbide also exhibited excellent damage tolerance during field tests in demanding applications where excessive heat checking and fracturing of inserts are common failure modes. Introduction Polycrystalline diamond and other hard materials are widely used in oil and gas drilling as well as other earth boring applications. Diamond enhanced inserts (DEI) for roller cone bits as an example has steadily gained acceptance in more and more applications. Chipping and catastrophic breakage are the primary failure modes for the materials and hence the limiting factor of service life of a drill bit. Figure 1 shows typical failure modes observed of diamond enhanced inserts. Chipping and fracture resistance can be improved at the expense of hardness and wear resistance of the materials. This trade-off between wear resistance and chipping resistance hinders the development of super hard materials for demanding drilling applications. It is an obvious desire, but a difficult challenge for engineers and scientists to seek means to improve fracture toughness without having to compromise wear resistance. The present paper discusses a new approach, characterized as "functionally designed microstructure", which attempts to improve functional mechanical properties as well as some intrinsic properties by means of a composite microstructure. For the purpose of discussion, mechanical properties of materials can be classified into two categories: intrinsic and functional properties. The hardness and fracture toughness are intrinsic properties. Wear and chipping resistance are the functional properties. Functional properties are determined fundamentally by the intrinsic properties; but are affected by service conditions, i.e., external mechanical and chemical environment.