A coated article such as a coated cutting tool or coated wear part, which includes a substrate and a coating scheme on the substrate. The coating scheme has a titanium-containing coating layer, and an aluminum oxynitride coating layer on the titanium-containing coating layer. The aluminum oxynitride includes a mixture of phases having a hexagonal aluminum nitride type structure (space group: P63mc), a cubic aluminum nitride type structure (space group: Fm-3m), and optionally amorphous structure. The aluminum oxynitride coating layer has a composition of aluminum in an amount between about 20 atomic percent and about 50 atomic percent, nitrogen in an amount between about 40 atomic percent and about 70 atomic percent, and oxygen in an amount between about 1 atomic percent and about 20 atomic percent. The method of making the coated article includes a step of providing a substrate and depositing an aluminum oxynitride coating layer from a gaseous mixture that includes nitrogen, aluminum tri-chloride, ammonia, carbon dioxide, hydrogen chloride, optionally carbon monoxide, optionally argon, and hydrogen.