In this work, an axisymmetric two-dimensional finite element model was developed to simulate instrumented indentation testing of thin ceramic films deposited onto hard steel substrates. The level of film residual stress (σr), the film elastic modulus (E) and the film work hardening exponent (n) were varied to analyze their effects on indentation data. These numerical results were used to analyze experimental data that were obtained with titanium nitride coated specimens, in which the substrate bias applied during deposition was modified to obtain films with different levels of σr. Good qualitative correlation was obtained when numerical and experimental results were compared, as long as all film properties are considered in the analyses, and not only σr. The numerical analyses were also used to further understand the effect of σr on the mechanical properties calculated based on instrumented indentation data. In this case, the hardness values obtained based on real or calculated contact areas are similar only when sink-in occurs, i.e. with high n or high ratio Y/E, where Y is the yield strength of the film. In an additional analysis, four ratios (R/hmax) between indenter tip radius and maximum penetration depth were simulated to analyze the combined effects of R and σr on the indentation load–displacement curves. In this case, σr did not significantly affect the load curve exponent, which was affected only by the indenter tip radius. On the other hand, the proportional curvature coefficient was significantly affected by σr and n.