Residual stresses are of practical importance in bulk materials and coatings, which critically affects their mechanical integrity and reliability. Comparing with traditional techniques, the depth-sensing indentation technique provides a quick and effective method of measuring the residual stress field. In this study, we have used the finite element method to investigate the effect of in-plane residual stress on hardness and stiffness measurements of a bulk material/thick coating. It is found that the contact hardness, stiffness, and indentation work are sensitive to the residual stress, in particular for materials with a relatively high yield strain. Based on the reverse analysis, a new technique is proposed for measuring the yield strength, Young’s modulus, and in-plane residual stress in bulk material and thick coatings through one simple indentation test. The effectiveness of this method is demonstrated through numerical examples. The effect of residual stress on indentation stress, plastic zone, and surface profile are also investigated. It is found that when the indentation is dominated by elastic deformation, the large recovery makes the surface profile measured after unloading an unreliable parameter in characterizing the properties