Many components, when exposed to aggressive environments like high temperatures and cyclic stresses, fail when their surfaces have degraded beyond a predetermined limit. Thus, the demand for improved performance requires early integration of coatings into product design in order to assemble a functional surface tailored to resist the particular environment in which the component is working. This functional surface, with a unique combination of bulk and surface properties, is vital to the successful performance of the component. The corresponding surface engineering technique is an integral part of the manufacturing process. This paper will review present and future trends in surface engineering with an emphasis on the design and on the preparation of functional surfaces for high temperature and for wear resistant applications. Topics to be covered are nanostructured coatings architecture and substrate-surface integration for improved hardness, thermal stability, oxidation resistance and tribological properties of cutting tools and of wear parts. An effort will be made to identify performance needs in these applications and the corresponding surface engineering solutions. A discussion will be held how to meet the challenge of surface engineering and of substrate-coating integration in materials design.