The resistance to cavitation erosion and sliding wear of stainless steel grade AISI 304 can be improved by using physical vapor deposited (PVD) coatings. The aim of this study was to investigate the cavitation erosion and sliding wear mechanisms of magnetron-sputtered AlTiN and TiAlN films deposited with different contents of chemical elements onto a stainless steel SS304 substrate. The surface morphology and structure of samples were examined by optical profilometry, light optical microscopy (LOM) and scanning electron microscopy (SEM-EDS). Mechanical properties (hardness, elastic modulus) were tested using a nanoindentation tester. Adhesion of the deposited coatings was determined by the scratch test and Rockwell adhesion tests. Cavitation erosion tests were performed according to ASTM G32 (vibratory apparatus) in compliance with the stationary specimen procedure. Sliding wear tests were conducted with the use of a nano-tribo tester, i.e., ball-on-disc apparatus. Results demonstrate that the cavitation erosion mechanism of the TiAlN and AlTiN coatings rely on embrittlement, which can be attributed to fatigue processes causing film rupture and internal decohesion in flake spallation, and thus leading to coating detachment and substrate exposition. At moderate loads, the sliding wear of thin films takes the form of grooving, micro-scratching, micro-ploughing and smearing of the columnar grain top hills. Compared to the SS reference sample, the PVD films exhibit superior resistance to sliding wear and cavitation erosion.