Nanostructured La 2 Ce 2 O 7 -doped YSZ coatings were developed using atmospheric plasma-spraying technique by optimizing various process parameters. To ensure the retention of nanostructure, the molten state of nanoagglomerates was monitored using plasma and particle diagnostic tools. It was observed that the morphology of the coating exhibits a bimodal microstructure consisting of nanozones reinforced in a matrix of fully-molten particles. The thermal diffusivity of nano-LaCeYSZ coatings is lower than that of nano and bulk YSZ. The reason for this change in thermal diffusivity may be attributed to scattering of phonons at grain boundaries, point defect scattering and higher inter-splat porosity. Also, the thermal conductivity of the nanocomposite coatings was lower than those of nanostructured and bulk YSZ coatings. XRD results show cubic zirconia with a small amount of tetragonal zirconia. The average grain size of the as-sprayed La 2 Ce 2 O 7 -YSZ nanocomposite coatings is ~150-200 nm. The improved thermal behavior is mainly due to a dense, packed, and more compact structure of the coatings.