An Inconel 718 alloy was coated by WC-17Co using a high-velocity oxygen fuel (HVOF) thermal spray process. The residual stress of WC-17Co coating under different heat-treatment conditions was investigated. The effect of residual stress on bending fatigue life of the coated alloy was discussed. It was found that fatigue cracks were initiated at the WC-17Co coating and propagated to the alloy substrate. The compressive residual stress generated during HVOF process could restrict the initiation and propagation of cracks. The absolute value of the compressive residual stress in WC-17Co coating decreased after annealing treatment, resulting in a lower fatigue life of the coated specimens.