Turbine blades are generally protected by thermal barrier coatings (TBCs) against high temperature oxidation and corrosion. A novel method has been developed to prepare nanostructured Al2O3 powders for thermal-spraying (atmospheric plasma spray) with high flowability. In this method, nano Al2O3 powders are granulated and then heat treated at 200°C which become suitable to be used in thermal spraying equipment. The normal Al2O3 and granulated nano Al2O3 powders were sprayed separately by using an atmospheric plasma spray device onto a typical TBC consisting of a superalloy bond coat and an YSZ top coat. Then, TBC/ normal Al2O3 and TBC/ nano Al2O3 coatings were oxidized at 1000°C for 24h and allowed to form the thermally grown oxide (TGO) layer onto the bond coat (NiCrAlY layer). The flowability of the granulated nano Al2O3 powders was studied by using a Hall flowmeter. The microstructural characterization showed that the granulated nano Al2O3 powders had very high flowability. The increased apparent density and flowability of the granulated nano Al2O3 powders had substantially reduced the micro-cracks and interconnected porosities in the coating in comparison with normal Al2O3 coating. The thickness of the TGO layer in YSZ/ normal Al2O3 coating was higher in comparison with YSZ/ nano Al2O3 coating after oxidation. Thus by using nano Al2O3 as a third layer, the thickness of the TGO layer and oxidized regions inside the bond coat decreased effectively which led to less mechanical stresses and can cause the improvement of TBC life.