To improve the toughness of Ni–P coatings, NiTi superelastic particles were introduced into the Ni–P matrix through the electroless co-depositing of Ni–P and Ti particles and annealing Ni–P–Ti coatings. The mechanical properties of the coatings were determined through bend testing bilayer specimens and tensile testing the standalone coating. The effects of Ti content and annealing on Young’s modulus, toughness, and fracture strength were investigated. After annealing, the toughness and strength improved considerably. The formation of the superelastic NiTi phase after annealing led to the improvement of toughness and fracture strength of the composite coating through transformation toughening, crack deflection, bridging, and shielding. Different toughening mechanisms interacted with each other and operated together. This contributed to the enhancement of toughness and fracture strength.