Abstract A condensed phase of zirconium monoxide (ZrO) was detected in YSZ (Zr 0.92 Y 0.08 O 2‐δ ) coatings deposited using plasma spray‐physical vapor deposition. The rapid cooling rate of this process can result in the condensation of nonequilibrium states that can be kinetically trapped in the coatings. The columnar microstructure contained a mixture of YSZ, ZrO 2, and ZrO phases. The ZrO phase was expected to be conductive based on density functional theory calculations, and preliminary impedance measurements were performed that supported this prediction. When heated in an oxygen‐containing environment, the ZrO phase remains in the coating until ∼450 K, at which point it disappears quickly, as confirmed by X‐ray diffraction and thermogravimetric methods. The loss of ZrO in the coating was also linked to a loss in electrical conductivity. However, it was shown that this phase can persist at elevated temperatures of ∼1000 K in vacuum or inert environments for at least 100 h.