Atmospheric plasma spraying (APS) is one of the most efficient processes for the preparation of yttrium oxide (Y2O3) ceramic coatings. Changing the spraying process parameters can significantly improve the microstructure and enhance the coating properties. In this study, the combination of plasma-spraying process parameters (current, spraying distance, and argon (Ar) flow) was varied by Response Surface Methodology (RSM) with the help of Minitab 19 software. Applied to the design of experiments, improvement of errors, and prediction of microstructure property results, the optimization and validation of experimental parameters for attaining the desired microstructure of Y2O3 coatings, especially porosity, was achieved. Process parameters were optimized by RSM: current 613.64 A, Ar flow rate 46.92 L/min, spray distance 15.38 cm, and optimum porosity 1.8% after optimization. Electrochemical corrosion experiments and breakdown voltage experiments revealed that the corrosion resistance and dielectric properties increased significantly as the porosity of the coatings decreased. Therefore, by optimizing the plasma-spraying process parameters, the porosity of the coatings can be significantly reduced and the corrosion resistance and dielectric properties of Y2O3 coatings can be effectively improved.