Plasma transferred arc (PTA) deposition process was applied to develop high temperature protective cermet coatings, metallurgically bonded to the substrate. In this work, yttria-stabilized zirconia (YSZ) filler with two different particle sizes was added into NiCrAlY to develop cermet coatings. Microstructural characterizations using optical and scanning electron microscopes revealed that the addition of 20 vol.% of YSZ modified considerably the morphology of the coating. The formation of tetragonal zirconia, resulting from high temperatures and rapid solidification during surfacing process, was revealed by the X-ray diffraction of the NiCrAlY + 20YSZ composite. The microhardness filiation performed on the composites was influenced by the presence of the YSZ filler particles into the composite coatings.