In this work, we examine the phase stability of both uncoated and alumina-coated zirconia nanoparticles using in-situ X-ray diffraction. By tracking structural changes in these particles, we seek to understand how changing interfacial bonding affects the kinetics of amorphous zirconia crystallization and the kinetics of grain growth in both initially amorphous and initially crystalline zirconia nanocrystals. Activation energies associated with crystallization are calculated using nonisothermal kinetic methods. The crystallization of the uncoated amorphous zirconia colloids has an activation energy of 117 +/- 13 kJ/mol, while that for the alumina-coated amorphous colloids is 185 +/- 28 kJ/mol. This increase in activation energy is attributed to inhibition of atomic rearrangement imparted by the alumina coating. The kinetics of grain growth are also studied with nonisothermal kinetic methods. The alumina coating again dramatically affects the activation energies. For colloids that were coated with alumina when they were in an amorphous structure, the coating imparts a 5 x increase in the activation energy for grain growth (33 +/- 8 versus 150 +/- 30 kJ/mol). This increase shows that the alumina coating inhibits zirconia cores from coarsening. When the colloids are synthesized in the tetragonal phase and then coated with alumina, the effect of surface coating on coarsening kinetics is even more dramatic. In this case, a 10 x increase in activation energies, from 28 +/- 3 kJ/mol for the uncoated particles to 300 +/- 25 kJ/mol for the alumina-coated crystallites, is found. The results show that one can alter phase stability in colloidal systems by using surface coatings and interfacial energy to dramatically change the kinetic barriers to structural rearrangement.