Nanostructured zirconia thermal barrier coatings (TBCs) have been prepared by atmospheric plasma spraying using the reconstituted nanosized yttria partially stabilized zirconia powder. Field emission scanning electron microscope was applied to examine the microstructure of the resulting TBCs. The results showed that the TBCs exhibited a unique, complex structure including nonmelted or partially melted nanosized particles and columnar grains. A CO2 continuous wave laser beam has been applied to laser glaze the nanostructured zirconia TBCs. The effect of laser energy density on the microstructure and thermal shock resistance of the as-glazed coatings has been systematically investigated. SEM observation indicated that the microstructure of the as-glazed coatings was very different from the microstructure of the as-sprayed nanostructured TBCs. It changed from single columnar grain to a combination of columnar grains in the fracture surface and equiaxed grains on the surface with increasing laser energy density. Thermal shock resistance tests have showed that laser glazing can double the lifetime of TBCs. The failure of the as-glazed coatings was mainly due to the thermal stress caused by the thermal expansion coefficient mismatch between the ceramic coat and metallic substrate.