Partially stabilized zirconia (PSZ) is an attractive material for thermal barrier coatings. Zirconia exists in three crystallographic phases: cubic, tetragonal and monoclinic. In particular, the phase transformation of tetragonal to monoclinic is accompanied by significant volume expansion, so this transition generally results in cracking and contributes to the failure of the TBC system. Both plasma-sprayed ZrO₂–8Y₂O₃ (YSZ) and ZrO₂–25CeO₂–2.5Y₂O₃ (CYSZ) coatings were isothermally heat-treated at 1300 and 1500 °C for 100 h and cooled at four different cooling rates. The monoclinic phase was not evident in all CYSZ samples annealed at 1300 and 1500 °C. In the 1500 °C heat-treated specimens, YSZ contains some monoclinic phase, while none exists in the 1300 °C heat-treated YSZ coating. The difference in phase transformation behavior between YSZ and CYSZ results from the degree of stabilization of the initial composition and the various cation radii. For YSZ, the different phase transformation behavior at the two temperatures is due to the stabilizing concentration of high-temperature phases and grain growth. For YSZ annealed at 1500 °C for 100 h, the amount of monoclinic phase increased with the slower cooling rate. High oxygen vacancy, formed during high-temperature holding, remained at room temperature due to a fast cooling rate. The extra oxygen vacancy at room temperature displaces an oxygen ion from the equilibrium position in the tetragonal phase and functions as a cubic stabilizer, so the tetragonal–monoclinic transformation is suppressed.