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 isotropic pressing (HIP) was then employed for consolidation of the mechanically alloyed powders. A cathodic arc vapour deposition process was applied to produce a TiAlN coating. 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 fairly good quality of TiAl based target. The PVD coatings obtained from the TiAl target showed very high microhardness values.