Thermal barrier coatings have been used for the last half century to protect parts in high temperature service from premature damage. Thermal barrier coatings are mostly produced by thermal spray techniques, especially plasma spray processes. They are widely used in the aerospace and automotive industries and in power plants, applications in which there is an ever-increasing demand for further improvement of functionality and durability. In the field of material design, use of composite coatings rather than monolithic material, and nano-structure instead of conventional grain sizes, are among the solutions most often considered. Suspension plasma spray is an innovative process for production of nano-structured thermal barrier coatings. This research was directed toward a superior thermal barrier coating using suspension plasma spray deposition of the alumina-yttria stabilized zirconia composite material with nano-crystalline structure. Crystallization of the amorphous phase is introduced as a new route toward nano-crystallinity in ceramics, as was previously applied in the metals and alloys.