The research involves the development of a powder metallurgical route for producing good quality TiAl targets for making physical vapour deposition (PVD) coatings. Mixtures of elemental titanium and aluminium powders were mechanically milled using a novel discus milling technique under various conditions. Hot isostatic pressing (HIP) was then employed for consolidation of the mechanically alloyed powders. A cathodic arc vapour deposition process was applied to produce a TiAIN coating. A microstructural examination was conducted on the target material and PVD coatings, using X-ray diffractometry (XRD), X-ray photoelectron spectrometry (XPS) and scanning electron microscopy (SEM). It has been found that combining mechanical alloying and HIP enable us to produce a fairly good quality of TiAl based target. The PVD coatings obtained from the TiAl target showed very high microhardness values.