Aluminium titanium oxynitrides were studied as candidate materials for high temperature absorbers in solar selective coatings due to their excellent stability and their tuneable optical behaviour. A set of individual AlyTi1−y(OxN1−x) layers with different oxygen content was prepared by cathodic vacuum arc (CVA) deposition. The composition, morphology, phase structure and microstructure of the films were characterized by elastic recoil detection (ERD), scanning and transmission electron microscopy and X-ray diffraction. An fcc phase structure is found in a broad compositional range of AlyTi1−y(OxN1−x). Simultaneously, sample microstructure and morphology undergo systematic changes from a columnar growth to the development of a heterogeneous structure with spherical nanoparticle inclusions when the oxygen concentration is increased. The optical properties were determined by spectroscopic ellipsometry and UV–Vis–NIR and FTIR spectrophotometry. A comprehensive analysis of the film properties allowed an accurate modelling of the optical constants of the AlyTi1−y(OxN1−x) in the whole wavelength range of solar interest (from 190 nm to 25 µm). It points to a transition from metallic to dielectric behaviour with increasing oxygen content. Consequently, it is demonstrated that the optical properties of these AlyTi1−y(OxN1−x) deposited films can be controlled in a wide range from metallic to dielectric character by adjusting the oxygen concentration, opening a huge range of possibilities for the design of solar selective coatings (SSC) based on this material. Complete SSC, including a TiN layer as IR reflector, were designed by applying optical simulations, obtaining excellent optical selective properties of α = 94.0% and εRT = 4.8%.