An attempt is made to develop the tools that are capable enough to withstand the shear, impact and thermal forces that occur during friction stir welding of stainless steels. The atmospheric plasma spray and plasma transferred arc hardfacing processes are employed to deposit refractory ceramic based composite coatings on the Inconel 738 alloy. Five different combinations of self-fluxing alloy powder and 60% ceramic reinforcement particulate mixtures are used for coating. The best friction stir welding tool selected based on tool wear analysis is used to fabricate the austenitic stainless steel joints.