The present work attempts to study the issues associated with heat treatment of electroless Ni–P–Cu coatings particularly with respect to oxidation and observe their impact on the hardness (micro- and nano-indentation), friction, and wear behavior of the coatings. Electroless Ni–P–Cu coating is deposited on low carbon steel substrates and subjected to heat treatment at temperatures ranging between 400°C and 800°C and for durations of 1 h and 4 h. Additionally, scratch tests are conducted on the coatings to evaluate their abrasion resistance as well as observe the influence of heat treatment conditions on the adhesion of the coatings. The changes in the microstructure of the coatings are suitably captured with various characterization tools, namely, scanning electron microscopy, energy dispersive X-ray spectroscopy, and X-ray diffraction. It is seen that above a heat treatment temperature of 450°C, oxidation of the coating is prominent. Moreover, diffusion of iron from the substrate leads to the formation of intermetallic compounds. The coating performs well when heat-treated around 400°C–450°C. Above 600°C, the performance of the coating degrades with unnecessary oxide formation and other associated phenomena, namely, grain coarsening, flaking, and so on.