The solution-precursor plasma spray (SPPS) method is a new process for depositing thick ceramic coatings, where solution feedstock (liquid) is injected into a plasma. This versatile method has several advantages over the conventional plasma spray method, and it can be used to deposit nanostructured, porous coatings of a wide variety of oxide and non-oxide ceramics for a myriad of possible applications. In an effort to understand the SPPS deposition process, key diagnostic and characterization experiments were performed on SPPS coatings in the Y2O3-stabilized ZrO2 (YSZ) system. The results from these experiments show that there are multiple pathways to SPPS coating formation. The atomized precursor droplets undergo rapid evaporation and breakup in the plasma. This is followed by precipitation, gelation, pyrolysis, and sintering. The different types of particles reach the substrate and are bonded to the substrate or the coating by sintering in the heat of the plasma. The precursor also reaches the substrate or the coating. This precursor pyrolyzes in situ on the substrate, either after it reaches a “cold” substrate or upon contact on a “hot” substrate and helps bond the particles. The coating microstructure evolves during SPPS deposition as the coating temperature reaches approximately 770 °C.