Thermal barrier coating (TBC) with Al 2 O 3 and 8YSZ as topcoat constituents has been developed. The commercially available 8YSZ (80% wt.), Al 2 O 3 (17 and 19% wt.) and multiwall carbon nanotubes (MWCNT) (3% and 1% wt.) were plasma sprayed to produce composite coatings. A stress relaxation technique using a slow-speed diamond cutter has been used to relax the strain and determine the through-thickness residual stress in the coatings. A 3D finite element model was developed, the model was experimentally validated, and the model was used to establish a relationship between applied stress and relaxed strain. The addition of alumina increased the compressive residual stress on the surface of the coating by 42%, the addition of 1% MWCNT had a negligible effect on the residual stress on the coating surface. The further addition of MWCNT (3% wt.) resulted in tensile residual stress in the coating as a result of MWCNT agglomeration.