Zirconia can induce enhanced fracture toughness to a number of ceramics when introduced as a reinforcement either in the form of particulates, dispersed phase or whiskers because of its unique tetragonal-monoclinic transformation. This paper presents the preparation of ZrO2 reinforced mullite by plasma spraying a mixture of zircon and alumina. The dissociation of zircon into zirconia and silica in a plasma flame is well-known. Pre-mixed powders of zircon and alumina are injected into a dc plasma jet. The plasma sprayed particles are collected in distilled water and analyzed. The results indicate that the plasma sprayed powders consist of zirconia, zircon and alumina. It was found that fine, mostly amorphous and chemically homogeneous composite powders can be obtained by ball milling and plasma spraying. Recrystallization of amorphous phases and formation of mullite occurred at about 1000 °C in plasma sprayed powders. This value is more than 500 °C lower than the formation of mullite in as-milled powders. Uniform coatings with good structural integrity were obtained by plasma spraying. The amount of amorphous phases was much higher in plasma sprayed coatings than in spheroidized powders, and the relative quantity of mullite in coatings after heat treatment is about 4 times as much as that obtained in the spheroidized powders.