Diamond-coated cutting tools are economically attractive alternatives to polycrystalline diamond tools for machining applications. Despite the superior tribological and mechanical properties, the advantages of diamond-coated tools, however, have been largely compromised by the insufficient coating-substrate adhesion. Interface characteristics are important in the failure and performance of diamond-coated tools. In this study, a cohesive zone model was incorporated to investigate diamond-coating tungsten carbide (WC) systems. The cohesive zone model is based on the traction-separation law, represented by four parameters: the maximum normal and shear strength and the normal and shear characteristic lengths, whose values were determined from WC fracture properties. The cohesive zone model was implemented in finite element codes to simulate indentation on a coating-substrate system. The model was applied to examine the interface behavior during the indentation, the role of the cohesive zone in the failure mechanism of coating systems, and the coating Young's modulus and thickness effects on different failure modes. The simulation results are summarized as follows. (1) The cohesive zone interface does not affect the critical load for coating surface tensile cracking, but affects the plastic strain during loading. (2) If the coating Young's modulus increases, the coating surface cracking will decrease, however, the interface delamination resistance will increase. (3) Increasing the coating thickness will generally increase the critical load for surface cracking, but will have an opposite effect when the coating exceeds a certain thickness. Moreover, thicker coatings typically reduce the interface delamination.