In this paper, the microstructure of nanostructured zirconia (ZrO2) based coating fabricated by newly developed process, high efficiency supersonic atmospheric plasma spraying (SAPS), is studied. The velocity and surface temperature of in-flight particles during spraying were monitored by on-line system and the microstructure and phase composition of the as-sprayed coating was characterized with SEM, TEM and XRD. Meanwhile, the bonding strength between the top coating and bond coating was measured. The results showed the average in-flight velocity of YSZ particles in SAPS was about 430m/s, which was much higher than that of conventional atmospheric plasma spraying (APS). The as-sprayed coating was composed of well-adhered fine lamellar structures with thickness of 1-4μm. The desirable structure was attributed to higher impact velocity of in-flight particles during SAPS process, resulting in the improvement of flattening degree of molten particles. Meanwhile, the SAPS-YSZ coating exhibited a bimodal distribution with small grains (30-50nm) and large grains (60-110nm), the latter was the main microstructure of the coating. In addition, it was found that the monoclinic zirconia existing in the original powders transformed into tetragonal phase after plasma spraying and the bonding strength of as-sprayed coating was as high as 46±3MPa. The high efficiency supersonic plasma spray, which offers some unique advantages over the conventional plasma spraying process, is expected to be potentially used to deposit a wide variety of nanostructured coatings at lower cost.