In physical vapour deposition (PVD) processes, deposition parameters such as pressure, power, temperature, etc. are extremely important for process control and coating performance. Among these target power and substrate temperature (Tsub) play a critical role in defining phase, morphology, adhesion, etc. Optimized parameters are very much required for their best performance, deviating from these will affect its performance and quality. Although relevant but they are the less attended parameters. In this work, two series of samples were prepared by varying (i) silicon nitride (Si3N4) target power (50, 75, 90 and 110 W); and (ii) substrate temperatures (200°C–450°C). Their role in the formation and evolution of microstructural and mechanical properties was studied for nc‐W2N/a‐Si3N4 nanocomposite coatings (nc: nano crystalline, a: amorphous). All the coatings were prepared by reactive magnetron sputtering. In the first series, the mechanical performance of nc‐W2N/a‐Si3N4 coatings, prepared by varying Si3N4 target power was compared with pure W2N. It has been shown that coating performance strongly depends on Si3N4 target power. The coating shows maximum enhancement of mechanical properties at 50 W Si3N4 target power. The 50 W can be selected as optimized power for the preparation of nc‐W2N/a‐Si3N4 nanocomposite coatings. In the case of the second series of samples, the role of substrate temperature in different parameters was measured/ calculated and compared. All properties show a strong dependency on Tsub. Field emission scanning electron microscope, shows modification in surface and internal (cross‐section) microstructure of coating on varying Tsub and on mechanical properties. Experimentally observed hardness‐microstructure relationship is in good agreement with theoretical Structure Zone Model (SZM). The above results confirm that excellent quality nc‐W2N/a‐Si3N4 coating can be prepared through magnetron sputtering at 400°C and 50 W of Si3N4 power. These results clearly show the importance of processing parameters for depositing a good quality of coating with excellent properties. These results will help the coating industries to improve their product performance.