A coated cutting tool has high wear resistance in a high-speed cutting operation of steel. The tool is made of a hard sintered substrate and has a hard coating layer deposited on a surface of the substrate. This hard coating layer includes a hard material layer and an inner layer having 0.1 to 10 &mgr;m for an average thickness with residual compressive stress. The inner layer is applied by physical vapor deposition. The hard coating layer also has an aluminum oxide layer as an outer layer having 0.1 to 5 &mgr;m for an average thickness. This outer layer is applied by chemical vapor deposition at a middle temperature.