Electron‐beam physical‐vapor‐deposited thermal barrier coatings consisting of ZrO₂ stabilized by 7 wt% Y₂O₃ were investigated in regard to phase transformation after annealing. Free‐standing ceramic layers were heat‐treated in air, for up to 200 h, in the temperature range 1200°—1400°C and then analyzed by X‐ray diffractometry. Based on information obtained from the {111} and {400} peaks, the phase composition and the Y₂O₃ content in the phases were calculated. At the start of transformation, small grains of a low‐Y₂O₃t phase and a c phase formed. After >30 h at 1300°C and at 1400°C, a mixture of a t phase deficient in Y₂O₃, an m phase, and a c phase formed after cooling, with the Y₂O₃ contents in the phases roughly predicted by the phase diagrams. The results of the present study are discussed here in detail and compared with data for plasma‐sprayed coatings.