Plasma spraying of ceramic nano-powders suspended in a liquid carrier medium is an emerging technology, which allows the formation of thinner coatings with microstructures more refined than conventional plasma spraying. An external injection system, where the suspension enters the plasma jet radially, is installed on a F4-Sulzer Metco dc torch for the production of nanostructured Al2O3 and ZrO2 coatings. The effect of injection parameters, such as initial droplet diameter, droplet velocity and suspension flow rate is studied. The suspension droplets are continuously generated through an exchangeable micron-sized nozzle with a superimposed pulse of variable ultrasonic frequency. The heat transfer from the plasma to the liquid feed is optimized at high droplet velocity, moderate counter-current injection angle and flow rates not exceeding a threshold value, which depends on the plasma enthalpy and the latent heat of the suspension medium. A significant effect of initial droplet size (220 – 500 µm) or solid concentration (5 – 15 %) is not observed. In-flight particle states are measured for different plasma conditions, and are related to the resulting microstructures by SEM and XRD. High particle temperatures give rise to a refinement in crystallite size, while the particle velocities govern the deposition efficiencies and porosity levels. The results show that the particles follow closely the gas flow in the free stream, as well as in the stagnation boundary layer close to the substrate by virtue of their limited inertia. The prominent difference in microstructure between highly porous alumina and very dense zirconia coatings is explained in terms of particle impact velocities, which are simulated for typical operating conditions as a function of particle size and free-stream gas velocity.