In this study, the influence of microscopic defects on the elastic modulus and damping of hard coatings was examined by finite element (FE) analysis. We present a method based on image processing and FE modelling to calculate the elastic modulus and loss factor of hard coatings. The calculated results agree with the results of the dynamic mechanical analysis. Furthermore, by using this method, the effects of the loading and friction coefficient between cracks on loss factor of hard coatings are studied. From the microscopic point of view, we study the relationship between the microscopic defects and macroscopic properties of the coating, thus providing a new idea for simulating and actively designing hard coatings.