A rotor housing for a rotary internal combustion engine is disclosed having a wear-resistant coating system characterized by high temperature hardness stability and controlled porosity to improve the lubricating characteristics of the surface-to-surface engagement with the rotary apex seals. The coating system comprises a self-fused composite of martensitic stainless steel powder and an equally hard powder consisting of a nickel-based alloy. Powder particle size is controlled to render a smoother machined surface and sub-surface porosity. An intermediate transition coating may be used consisting of a composition selected from nickel aluminide, are sprayed nickel, molybdenum, all effective to operate as a bonding intermediate to a supporting aluminum structure.A method of producing the wear-resistant coating system for a rotor housing is disclosed, comprising preparation of an aluminum casting having a supporting epitrochoid end wall, machining a reference, embedment of thermally resistant plugs about certain openings in the end wall, removing a uniform layer of said casting end wall to a predetermined depth, soft grit blasting of the removed surface, coating of the margins about ports in the end wall with an anti-bond material flame spraying the entire end wall with a mixture of martensitic stainless steel and a nickel-based alloy, immersing said coated casting in oil for a predetermined period of time immediately after coating, and grinding off a portion of said coating to the depth of said reference.