Atomic layer deposition (ALD) of ZrN is a candidate technology for coating U-Mo dispersion fuel as a diffusion barrier coating. During the early development stages of the coating the ZrN deposition showed to be mechanically unstable and ultimately resulted in spalling. Based on experimental outcomes it was found that instabillity can be eliminated through the introduction of a thin amorphous (a) Al2O3 interlayer coating deposited in between the similar to 1-mu m thick ZrN and the U-Mo. substrate. To elucidate these findings simulations were performed with density functional theory (DFT) to measure work of adhesions at different interfaces while finite element modeling (FEM) was performed to measure the residual stress distribution. DFT indicated that the ZrN coating deposited over (a)-Al2O3 is similar to 2.5 times stronger when compared to direct deposition over U or UO2 substrate. While calculations from FEM recognized; (1) large stress concentrations can originate from the irregularly distributed native surface oxides (UO2) over U-Mo and (2) stress concentrations can be reduced if those surface UO2 can be modified to a uniform layer (achieved after application of a 8 nm (a)-Al2O3 interlayer). These results provided explanations and confirmed the role played by interlayer in eliminating the original mechanical instability of the ZrN.