Friction and wear minimizing coatings are crucial for applications in combustion engines and medical implants. Their performance is typically limited by mechanical failure especially due to local overload. In this work, the contact damage creation, evolution, and final morphology of hydrogenated diamond-like carbon (DLC)-coated titanium (Ti) substrates are investigated. The influence of the DLC film thickness and the elastic–plastic deformation of the Ti on the contact damage are studied by microindentation and static finite-element analysis. Film thickness, indenter radius, and applied load as well as the elastic–plastic deformation of the Ti are shown to significantly affect contact damage. A failure plot is presented with the location of first failure in the DLC and compared to the experimental observation. In addition, a case study with variable fracture toughness of the DLC and its influence on the failure plot is shown. The stress distribution in the DLC follows a transition from a membrane-like to a plate-like deformation behavior upon increasing the DLC film thickness. Thin DLC films reveal increased cracking in the inner zone of the indent, while thicker DLC films reveal pronounced edge cracking. These edge cracks were correlated to pop-ins in force–displacement curves upon microindentation. Finally, a film thickness optimization process is presented for hard and brittle films on soft and ductile metallic substrates.