Zirconia is effective in improving the fracture toughness to a number of ceramics when introduced as a reinforcement either in the form of particulate, dispersed phase, or whiskers because of its unique tetragonal-monoclinic (t → m) transformation. In this paper, the authors attempt to prepare ZrO2 reinforced Mullite by plasma spraying mixtures of zircon and alumina. Pre-mixed powders of zircon (ZrSiO4) and alumina are injected into a dc plasma jet. The plasma sprayed particles are collected in distilled water and analyzed. The dissociation of zircon in thermal plasma is a well-established fact. The present investigation aims to utilize the plasma dissociation of zircon to produced ZrO2-toughened mullite from a zircon + alumina mixture. The results indicate that the plasma sprayed powders consist of zirconia, amorphous SiO2, zircon, and alumina. It was found that ball milling and plasma spraying could yield fine grained, even amorphous and chemically homogeneous, composite powders. 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 relative quantity of mullite in coatings after heat treatment is about 4 times as much as that obtained in the spheroidized powders. Preheat treatment of the spheroidized powder promoted dissociation of zircon. Zirconia remained as tetragonal under 1000 °C in the sprayed coatings.