Yttria-stabilised zirconia (YSZ) coatings were deposited on austenitic stainless steel coupons from nanostructured powders using atmospheric plasma spraying (APS). Two suspensions of YSZ nanoparticles were used as starting material: a diluted commercial suspension and a highly concentrated in-house prepared suspension (obtained by adding an YSZ submicronic powder to the diluted suspension). Both suspensions were reconstituted into sprayable micrometric granules. The reconstitution process was performed by spray drying, followed by a thermal treatment in order to reduce porosity and enhance agglomerate sinterability. The reconstituted powders were characterised by XRD, SEM, granule and pore sizing techniques, and a flowability evaluation. The effect of suspension characteristics on granule morphology and porosity was examined. The reconstituted powders were successfully deposited, yielding well-bonded coatings. The coating microstructure was characterised by XRD and SEM. Mechanical properties and erosion resistance were also determined. Coating microstructure consisted of semi-molten feedstock agglomerates surrounded by fully molten areas that acted as binders. The influence of feed powder characteristics on coating microstructure and properties was also studied.