The manufacturing of a HVOF-sprayed functionally graded coating (FGC), consisting of two NiAl/WC-Co composite layers with increasing cermet content and a pure WC-Co topmost layer, is discussed in this paper. As the stress build-up during spraying, measured via curvature method, is reduced in the NiAl-rich layers, thick coatings can be deposited with lower risk of delamination, in comparison to a pure WC-Co thick layer. Thermal stresses within the layers and the stainless steel substrate, measured from low temperature thermal cycling tests, are also reduced. The mechanical behaviour of the top layer in the graded structure at relatively low loads (i.e. pin-on-disk) is equivalent to the same layer without gradation, whereas at high loads (i.e. ball-drop impact test) the enhanced compliance with depth increases the load bearing capability of the graded structure. Electrochemical corrosion tests demonstrate no significant interconnected porosity and therefore, no interaction of the graded layers with the topmost WC-Co layer. The deterioration of the deeper layers under wear and corrosive conditions are also tested to investigate their performance in the scenario that the top layer coating wears out exposing the deeper layers to the surface.