In this work, we examine the receding contact between a homogeneous elastic layer and a half-plane substrate reinforced by a functionally graded coating. The material properties of the coating are allowed to vary exponentially along its thickness. A distributed traction load applied over a finite segment of the layer surface presses the layer and the coated substrate against each other. It is further assumed that the receding contact between the layer and the coated substrate is frictionless. In the absence of body forces, Fourier integral transforms are used to convert the governing equations and boundary conditions of the plane receding contact problem into a singular integral equation with the contact pressure and contact size as unknowns. Gauss–Chebyshev quadrature is subsequently employed to discretize both the singular integral equation and the force equilibrium condition at the contact interface. An iterative algorithm based on the method of steepest descent has been proposed to numerically solve the system of algebraic equations, which is linear for the contact pressure but nonlinear for the contact size. Extensive case studies are performed with respect to the coating inhomogeneity parameter, geometric parameters, material properties, and the extent of the indentation load. As a result of the indentation, the elastic layer remains in contact with the coated substrate over only a finite interval. Exterior to this region, the layer and the coated substrate lose contact. Nonetheless, the receding contact size is always larger than that of the indentation traction. To validate the theoretical solution, we have also developed a finite-element model to solve the same receding contact problem. Numerical results of finite-element modeling and theoretical development are compared in detail for a number of parametric studies and are found to agree very well with each other.