Near-net shape austempered ductile iron (ADI) castings can be considered a significant economic advantage to the increasing industrial demand for cost and weight efficient materials. However, due to microstructure induced inherent properties, ADI is considered a hard to machine material. The present paper thus investigates the interaction between the microstructural characteristics of ADI and wear mechanisms of PVD-coated carbide tools. The inherent properties of ADI materials are the function of its microstructural characteristics (retained austenite volume content and its carbon content, ferritic cell size, etc.) which can be controlled by the austempering parameters. Experimental studies of dry drilling of different ADI materials with the PVD-coated carbide tools were carried out at a cutting speed of 60 m/min and at a feed of 0.15 mm/rev. The wear mechanisms of the cutting tools were studied by using scanning electron microscopy (SEM) and energy dispersive spectroscopy (EDS) analysis techniques. The obtained results revealed the evolution of crater wear as the main wear mode. In addition, it provides the key findings aims to correlating the machining characteristics of ADI with its microstructure and production parameters. © (2015) Trans Tech Publications, Switzerland.