6~8% Y2O3 partially stabilized ZrO2 (YPSZ) nanostructured coatings were fabricated by atmospheric plasma spraying (APS). The fractured cross-section morphologies of the samples were observed by scanning electron microscopy (SEM). The thermal conductivities of free-standing pure nanostructured YPSZ coatings samples were determined using the laser flash technique. Specific heat was measured through a differential scanning calorimeter. The results showed that there is a great difference between the fractured cross-section microstructure of nanostructured and conventional zirconia coatings. The nanostructured one exhibits a bimodal distribution of microstructure, viz. directional crystal and isometric crystal structure. Plasma spraying parameters have a significant effect on the microstructure through changing the content of isometric crystal structure in the coating. The thermal conductivity decreased with increased isometric crystal microstructure content. The thermal conductivity can be lowered up to 60%.