Cr3C2-20(NiCr) coating powder was deposited on a low carbon steel by pulsed detonation spray gun technique. The coated samples were heat-treated at 600 °C for 11/2 h and allowed to cool in air. A systematic microstructural study was carried out using SEM and TEM to understand the microstructural changes. The mechanical properties like hardness, indentation fracture toughness and adhesion strength of the coating in the as-sprayed and heat-treated conditions were also determined. The change in solid particle erosion of the coating was correlated with the microstructural and subsequent mechanical property changes. It was observed that exposure of the as-sprayed coating to elevated temperature improves the wear resistance. It is concluded that crystallisation of the amorphous phase into nanocrystalline composite combined with better bonding between the adjacent splats through sintering contributes to improved hardness, fracture toughness and wear resistance of the heat-treated coating. The deformation characteristics of the binder phase, amorphous vis-à-vis crystalline, also influence the wear behaviour of the coating. © 2007 Elsevier B.V. All rights reserved.