The development of constituent phases and microstructure in plasma sprayed Al₂O₃–13wt.%TiO₂ coatings and reconstituted nanocrystalline feed powder was investigated as a function of processing conditions. The microstructure of the coatings was found to consist of two distinct regions; one of the regions was completely melted and quenched as splats, and the other was incompletely melted with a particulate microstructure retained from the starting agglomerates. The melted region predominantly consisted of nanometer-sized γ-Al₂O₃ with dissolved Ti⁴⁺, whereas the partially melted region was primarily submicrometer-sized α-Al₂O₃ with small amounts of γ-Al₂O₃ with dissolved Ti⁴⁺. The ratio of the splat microstructure to the particulate microstructure and thus the ratio of the γ-Al₂O₃ to α-Al₂O₃ can be controlled by a plasma spray parameter, defined as the critical plasma spray parameter (CPSP). This bimodal distribution of microstructure and grain size is expected to have favorable impact on mechanical properties of nanostructured coatings, as has been observed before.