In this paper, applicability of the modified water-based yttria stabilized zirconia (YSZ) suspensions, including different dispersants, to produce plasma sprayed coatings with “columnar microstructure” is investigated. The effects of processing parameters like suspension liquid phase ethanol content, change of substrate roughness, and spray distance on the resulting coatings morphologies are investigated. The results showed that increasing ethanol concentration, substrate surface roughness, and the spray distance promote formation of coatings with columnar structure. Moreover, application of modified water-based suspensions including α-Terpineol dispersant has led to deposition of columnar coatings with comparable morphologies of coatings deposited from ethanol-based suspensions.