In the present study, tungsten carbide‐cobalt was coated on the austenitic stainless steel using high velocity oxy‐fuel spraying. The as‐deposited coatings were heat treated at 750 °C in air and argon gas environments. Structural characteristics of these coatings were studied using x‐ray diffraction and Raman spectrum analysis. Further, the microhardness of the polished coated samples was also evaluated. The hardness of the coatings was significantly improved after heat treatment in air and argon gas environment. However, the highest hardness was observed with the coatings treated in argon gas environment. The formation of oxide phases such as tungsten trioxide and cobalt tungstate was observed after heat treatment in the air environment, whereas under the argon environment, no oxide phases were observed. Tungsten carbide‐cobalt coating was prepared using high velocity oxy‐fuel process and the effect of heat treatment environment on the structural characteristics and microhardness was investigated. Oxidation of the coating under air environment was observed to be responsible for the decreased microhardness as compared with the coating treated under the argon environment.