A process for manufacturing a coated cutting tool consisting of a substrate and a single-layer or multi-layer hard material coating, the substrate being selected from cemented carbide, cermet, ceramics, cubic boron nitride (cBN), polycrystalline diamond or high-speed steel, and the hard coating comprising at least one layer of Al a Cr b Me c O d N e, wherein a, b, c, d, and e are atomic ratios, and wherein a + b + c + d + e = 1, a, b, d and e each are > 0, c = 0 or c > 0, a ≥ b, c / a + b + c ≤ 0.1, preferably ≤ 0.05 0.1 ≤ d / d + e ≤ 0.5, wherein Me is at least one element selected from the group consisting of Ti, Zr, Ta, Nb, Hf, Si, and V and wherein the Al a Cr b Me c O d N e layer is deposited by an arc vapor deposition process (Arc-PVD) using targets containing Al and Cr with an AI:Cr atomic ratio in the range of 95:5 to 50:50, and wherein - the reaction gas mixture contains O 2 gas and N 2 gas, wherein optionally a portion or all of the O 2 gas and a portion of the N 2 gas is replaced by a nitrogen and oxygen containing gas, selected from nitrous oxide, N 2 O, nitric oxide, NO, nitrogen dioxide, NO 2, and dinitrogen tetroxide, N 2 O 4, - the reaction gas mixture optionally contains one or more inert gases, - the total gas pressure is within the range from 7 Pa to 15 Pa, - the O 2 partial pressure is at a stabilized stage of the process and is from 0.001 Pa to 0.1 Pa, - 0.002 ≤ (flow rate (O 2) / flow rate (N 2) ≤ 0.02, at an essentially stabilized stage of the O 2 and N 2 partial pressures at constant flows, - (flow rate (O 2) + flow rate (N 2)) / flow rate (inert gas) ≥ 4, at an essentially stabilized stage of the O 2 and N 2 partial pressures at constant flows, - if replacing a portion of O 2 gas and/or N 2 gas by a nitrogen and oxygen containing gas, selected from nitrous oxide, N 2 O, nitric oxide, NO, nitrogen dioxide, NO 2, and dinitrogen tetroxide, N 2 O 4, the values for the flow rate (O 2) and the flow rate (N 2) are recalculated by taking into account the molar amounts of oxygen and nitrogen in the replacing gas. a, b, d and e each are > 0, c = 0 or c > 0, a ≥ b, c / a + b + c ≤ 0.1, preferably ≤ 0.05 0.1 ≤ d / d + e ≤ 0.5, wherein Me is at least one element selected from the group consisting of Ti, Zr, Ta, Nb, Hf, Si, and V and wherein the Al a Cr b Me c O d N e layer is deposited by an arc vapor deposition process (Arc-PVD) using targets containing Al and Cr with an AI:Cr atomic ratio in the range of 95:5 to 50:50, and wherein - the reaction gas mixture contains O 2 gas and N 2 gas, wherein optionally a portion or all of the O 2 gas and a portion of the N 2 gas is replaced by a nitrogen and oxygen containing gas, selected from nitrous oxide, N 2 O, nitric oxide, NO, nitrogen dioxide, NO 2, and dinitrogen tetroxide, N 2 O 4, - the reaction gas mixture optionally contains one or more inert gases, - the total gas pressure is within the range from 7 Pa to 15 Pa, - the O 2 partial pressure is at a stabilized stage of the process and is from 0.001 Pa to 0.1 Pa, - 0.002 ≤ (flow rate (O 2) / flow rate (N 2) ≤ 0.02, at an essentially stabilized stage of the O 2 and N 2 partial pressures at constant flows, - (flow rate (O 2) + flow rate (N 2)) / flow rate (inert gas) ≥ 4, at an essentially stabilized stage of the O 2 and N 2 partial pressures at constant flows, - if replacing a portion of O 2 gas and/or N 2 gas by a nitrogen and oxygen containing gas, selected from nitrous oxide, N 2 O, nitric oxide, NO, nitrogen dioxide, NO 2, and dinitrogen tetroxide, N 2 O 4, the values for the flow rate (O 2) and the flow rate (N 2) are recalculated by taking into account the molar amounts of oxygen and nitrogen in the replacing gas. - the reaction gas mixture contains O 2 gas and N 2 gas, wherein optionally a portion or all of the O 2 gas and a portion of the N 2 gas is replaced by a nitrogen and oxygen containing gas, selected from nitrous oxide, N 2 O, nitric oxide, NO, nitrogen dioxide, NO 2, and dinitrogen tetroxide, N 2 O 4, - the reaction gas mixture optionally contains one or more inert gases, - the total gas pressure is within the range from 7 Pa to 15 Pa, - the O 2 partial pressure is at a stabilized stage of the process and is from 0.001 Pa to 0.1 Pa, - 0.002 ≤ (flow rate (O 2) / flow rate (N 2) ≤ 0.02, at an essentially stabilized stage of the O 2 and N 2 partial pressures at constant flows, - (flow rate (O 2) + flow rate (N 2)) / flow rate (inert gas) ≥ 4, at an essentially stabilized stage of the O 2 and N 2 partial pressures at constant flows, - if replacing a portion of O 2 gas and/or N 2 gas by a nitrogen and oxygen containing gas, selected from nitrous oxide, N 2 O, nitric oxide, NO, nitrogen dioxide, NO 2, and dinitrogen tetroxide, N 2 O 4, the values for the flow rate (O 2) and the flow rate (N 2) are recalculated by taking into account the molar amounts of oxygen and nitrogen in the replacing gas.