Two-phase (Ce0.9Gd0.1O1.95)(0.5)/(Zr0.92Y0.O-08(1.96))(0.5) (GDC/YSZ) nanocomposite thin films with vertically aligned structure are grown as the electrolyte for thin film solid oxide fuel cells (TFSOFCs). X-ray diffraction (XRD) and transmission electron microscopy (TEM) results confirm that GDC and YSZ grow as separated, high crystallinity nanocolumns with tunable column width on both single crystal and polycrystalline anode substrates. Impedance measurements demonstrate similar to 50% enhancement in ionic conductivity compared to pure single-crystal-like GDC thin film. The enhanced properties in the GDC/YSZ vertically aligned nanocomposite (VAN) system may be attributed to two-phase strain coupling and the fast ionic transport rate along the vertical interfaces. The VAN is applied in thin film SOFC as a part of the electrolyte in the single cells. The overall power density increases more than 40% compared with that of the cells without VAN electrolyte. This work demonstrates the first VAN nanostructured electrolyte with the essential vertical ion-transport channels. The new VAN electrolyte provides superior out-of-plane ionic conductivity compared to those single phase electrolytes as well as the nanolayered electrolytes. (C) 2013 Elsevier B.V. All rights reserved.