The hardness and fracture toughness of high-temperature wear-resistant transition metal aluminum nitride multilayer films depend largely on the constituting layer's structure, compositional modulation, morphology, and interface coherency. We present a study on 1-micron thick multilayered films consisting of stacked layers of TiN and Zr0.37Al0.63N1.09, each layer being 10 nm thick. The films were grown using ion-assisted reactive magnetron sputtering on MgO(001) and Si(001) at substrate temperatures ranging from ambient to 900°C. By increasing growth temperature, we found that the ZrAlN layers transition from near amorphous to nanocrystalline wurtzite to decomposed c-ZrN and w-AlN domains. Concurrently, the TiN layers exhibit strong fiber texture, polycrystallinity, and epitaxial growth carried by the ZrN domains. Both hardness and fracture stress, evaluated by nanoindentation and micromechanical tests, increase with temperature from H=24 GPaMgO, 23 GPaSi to 36 GPaMgO, 30 GPaSi, and σFSi= 6.1-7.7 GPa, respectively. An improved fracture toughness of KIC=2.4-2.8 MPa√m is related to different toughening mechanisms for the various microstructures. The difference in hardness between the substrates is related to compressive stress due to the deposition conditions and thermal contraction. The superior fracture stress is attributed to dense multilayers, free from macroscopic defects due to ion-assisted growth. After being deposited at 200°C, the multilayers remained thermally stable when vacuum annealed for 15 hours at 900°C, with no significant change in phase composition or hardness. The improved hardness, toughness, and temperature stability of the otherwise brittle nitrides are promising for industrial applications.