Electroless Ni-P coatings containing SiC particles were co-deposited on SKD61 tool steel substrate. The effect of heat treatment on the microstructure of Ni-P-SiC composite coatings was investigated by X-ray diffraction and transmission electron microscopy. The presence of SiC particles did not affect the microstructure of the Ni-P alloy matrix when annealing temperature was below 400 degreesC. However, by increasing annealing temperature to 450 degreesC, SiC particles decomposed and reacted with nickel to form gamma-Ni5Si2 and beta(1)-Ni3Si phases with a consequent free carbon precipitation. The structure of carbon was crystalline graphite with (0 0 0 2) preferred orientation and tended to aggregate while the amount of free carbon increased. On further annealing at 500 degreesC, phosphorus was incorporated into the Ni5Si2 lattice, forming a Ni-5(Si1-x, P-x)(2) solid solution.