Thin films of Ce0.8Gd0.2O1.9‐δ (CGO) are deposited by flame spray deposition with a deposition rate of about 30 nm min−1. The films (deposited at 200 °C) are dense, smooth, and particle‐free and show a biphasic amorphous/nanocrystalline microstructure. Isothermal grain growth and microstrain are determined as a function of dwell time and temperature and correlated to the electrical conductivity. CGO films annealed for 10 h at 600 °C present the best electrical conductivity of 0.46 S m−1 measured at 550 °C. Reasons for the superior performance of films annealed at low temperature over higher‐temperature‐treated samples are discussed and include grain‐size evolution, microstrain relaxation, and chemical decomposition. Nanoindentation measurements are conducted on the CGO thin films as a function of annealing temperature to determine the hardness and elastic modulus of the films for potential application as free‐standing electrolyte membranes in low‐temperature micro‐SOFCs (solid oxide fuel cells).