This study investigated suitability of TiN and TiCN-coated cemented carbide tools in the machining of conventionally produced stainless steel with HIPed (Hot Isostatic Pressed) NiTi coating. Near-equiatomic nickel-titanium alloy (NiTi) has many attractive material properties, such as pseudo-elasticity and shape memory effects, which result into beneficial engineering properties, e.g. as cavitation resistant coatings in addition to its well-known shape memory properties. Stainless steels are often considered to be poorly machinable materials; materials with high elasticity are also difficult to machine. In drilling stainless steel with a pseudo-elastic coating material, machinability difficulties are caused by the high strength and work hardening rate of steel and the pseudo-elastic properties of the coating material. The machinability was studied by analyzing cemented carbide drills and chips. The interface between stainless steel and NiTi coating was examined with SEM (scanning electron microscopy) and EDS (energy dispersive spectroscopy) analysis. The effect of feed rate on chip formation and tool wear was analyzed. The cutting tests indicated that cutting speeds of 50m/min, a feed rate of 0.1-0.2mm/rev, and solid carbide drills can be applied, from a machinability standpoint. A HIPed pseudo-elastic coating decreases machinability. When effective cutting speeds and feed rates were utilized, optimal tool life was achieved without a decrease in coating properties.