Coatings with high thermal stability and low coefficients of friction (CoF) are in high demand for advanced engineering applications requiring enhanced wear resistance under extreme conditions. This present study investigates the structural evolution, tribological behavior, and thermal stability of TiAlCN coatings deposited by High Power Impulse Magnetron Sputtering (HiPIMS) with varying carbon contents. The coatings were annealed at 450 °C and 750 °C to evaluate their performance in both as-deposited and thermally treated conditions. The results indicate that increasing the carbon content from 0 to 31 at. % led to grain refinement and facilitated the transformation of the cubic TiAlCN phase into nanocrystals embedded within an amorphous carbon-rich matrix. Coatings containing 16 and 31 at. % carbon exhibited enhanced graphitic ordering, which attenuated phase decomposition into cubic-TiN and cubic-AlN at elevated temperatures, a phenomenon observed in TiAlN and TiAlCN coatings with lower carbon content (11 at.%). Notably, the coating with 11 at. % carbon showed improved mechanical strength and wear resistance after annealing. In contrast, coatings with higher carbon contents (16–31 at.%) exhibited reduced friction coefficients (0.2) and more stable wear performance, attributed to the formation of a lubricious graphitic tribolayer.