AISI H-13 tool steel is used for industrial extrusion dies, due to its high strength and hardness at elevated temperatures. Friction between dies and materials during extrusion process has a direct influence on the process efficiency, product quality and extrusion forces. It is customary to harden dies surfaces using nitriding process in order to reduce the friction coefficient and decrease wear. Although, gas nitriding process is well studied, detailed study of the diffusion layer structure and the effect of repeated nidring process on this layer, was not done yet. X-ray diffraction, scanning electron microscopy and micro-hardness tests were used to evaluate the thickness and the structure of the nitrided layer. Different depths inside the nitrided layer were studied using high resolution transmission electron microscopy and electron diffraction. This analysis was used for precise investigation of the different structures inside the nitrided layer .The study revealed the formation of inter-granular compound layer deep inside the diffusion layer, consist of the non-equilibrium Fe8N nitride compound. This inter-granular layer might be the cause for accelerated wear and failure of re-use extrusion dies.