Plasma-sprayed 8 wt.% Y2O3 partially stabilized ZrO2 coatings were subjected to hot isostatic pressing (HIP) treatment. Changes in microstructure, composition and fracture mode were examined from the as-sprayed and hipped coatings by X-ray diffraction, scanning electron microscopy and electron probe microanalysis. A dense and crack-less ZrO2 coating can be achieved by applying HIP treatment. During HIP treatment, the non-transformable and high yttria content tetragonal phase experiences a certain degree of recrystallization, forming fine equiaxed grains. Because of sintering effects and subsequent inter-growth between lamellae and between splats, a metallurgical bonding is realized between them, resulting in a fracture mode of the hipped coating as mainly trans-lamella or trans-splat. After HIP treatment, a thin layer of Al2O3 develops at the interface between the ZrO2 coating and the metallic inner layer of Ni-5 wt.% Al alloy (bond coat). Because of obvious inter-diffusion between elements during HIP treatment, a wide transition layer is formed in the bond coat-substrate interface. The Kirkendall pores, formed in the bond coat neighboring the bond coat-transition layer interface and within the transition layer, as a result of two chemical species diffusing in opposite direction at different rates, can be partially closed up or reduced in size by applying HIP treatment.