Deformation and fracture in aluminum with a bi-layer composite coating are studied numerically. Dynamic boundary-value problems in the plane-stress formulation are solved by the finite element method, using ABAQUS/Explicit. Isotropic elastoplastic and elastic-brittle constitutive models are used to simulate the mechanical response of the aluminum matrix and carbide ceramic particles, respectively. Microstructure of the composite coatings takes into account the complex shape of particles explicitly. To investigate the crack initiation and propagation in ceramic particles, a Huber type fracture criterion was chosen that takes into account the type of local stress state: bulk tension or compression. The influence of the arrangement of the coating layers on the fracture of ceramic particles and on the macroscopic strength of the coated materials is studied. Plastic strain localization, crack patterns and residual stress formation are numerically investigated during cooling followed by tension of the coated material