As an ideal zirconia thermal barrier coating, the coating microstructure with the strong bonding among coating particles and with certain amount porosities in the coating without connected porosity is desirable. However, it is difficult for usual plasma-spraying to create a zirconia coating with these characters. In order to obtain an excellent zirconia coating with these characters, we prepared zirconia coating on steel substrate under coated with NiCrAlY alloys by means of a hybrid spraying (that is, YAG laser combined plasma spraying) and studied the effect of this hybrid spraying process and plasma and laser conditions on the microstructure of coating, and further compared the microstructure of the coating in this hybrid spraying with that in post-laser irradiation of as-sprayed zirconia coating. It is known that the microstructure with densification is formed by the post-laser irradiation of as-sprayed coating and that microcracks are newly produced in the process of rapid cooling. However, by using this newly-developed hybrid spraying, the microstructure with partial densification in the coating without connected porosities was formed and cracks which is generally produced in the post-laser irradiation treatment were inhibited completely. In addition, this hybrid spraying can be done without the post-treatment of coating. Furthermore, the coating properties, such as hardness and wear resistance associated with bonding state among the coating particles in the zirconia coating created by this hybrid spraying were improved.