Abstract In order to understand the indentation response of thin films with non-homogeneous microstructures, it is necessary to characterise local deformation fields and microstructural changes around the indenter imprint. In this work, residual stress fields across a wedge-indented nanocrystalline CrN–Cr thin film with a respective sublayer thickness of 500 nm and 250 nm and an overall thickness of 3 μm on a steel substrate are characterised ex situ, using cross-sectional synchrotron X-ray nanodiffraction with a spatial resolution of 100 nm. In the as-deposited multilayer, residual stresses of ∼−3.5 and −1 GPa in the CrN and Cr sublayers, respectively, are found. After the indentation, a complex stress distribution across the film cross-section with stress peaks in the range from −10 to 2 GPa was observed. In agreement with the results from a finite element model, the formation of the residual stresses can be interpreted by the plastic deformation of the Cr sublayers and the steel substrate in conjunction with a linear elastic response of CrN. During the indenter unloading, the plastically deformed materials hinder the full relaxation of the indentation-induced high compressive and tensile stresses in linear elastic deformed brittle regions and the stresses remain partly conserved. The ductile Cr sublayers serve as a fundamental stabilizing component, which ensures that the stress peaks do not cause the film rupture or delamination, but the damage remains arrested between the plastically deformed Cr sublayers and the substrate. The encapsulation of the highly stressed and damaged regions, enhanced by the excellent sublayer adhesion, serves as the decisive and stabilizing component to the multilayer mechanical integrity during and after the indentation.