A high-hardness Fe-C-W-Nb-B coating was prepared on 42CrMo substrate by laser cladding. The crack sensitivity, microstructure, and residual stress were studied and compared with commercial Fe-C-W-Mo coating produced by Höganas. The results exhibit that all coatings had microstructure consisting of a martensite matrix and reinforcements. The single-pass coating had a residual stress of about −695.8 MPa, 1.21 times that of the commercial coating (-575.6 MPa). The coating exhibited compressive residual stress due to thermal and transformation stress interaction. The multi-pass coating was crack-free and presented a hardness higher than 900 HV. However, the commercial coating cracked, despite its hardness being only 791.4 HV. The high-hardness coating had a more uniform distribution of residual stress than the commercial coating, reducing the cracking risk.