Investigations of interaction residual stresses between thin WC-Co surface coated layers on thick mild steel substrates have successfully been performed with neutron diffraction. This systematic approach was conducted on the reference grit-blasted substrates and their HVOF coated WC-Co products. Using a sub-millimeter gauge volume, precisely positioned, the stress gradient through the coated and non-coated substrates were determined and used to derive the coating stress condition prevailing in the thin coating by applying the stress balance (Stoney) approach. In addition, the average stress in each 200 μm thick coating was measured directly with very good agreement obtained between the calculated and measured stress values. Investigations were extended to determine the thermal nature of the residual stresses by studying the annealed counterpart samples as well to follow the evolution of the residual stress upon annealing.