The major problems with plasma sprayed hydroxyapatite (HA) coatings for hard tissue replacement are severe HA decomposition and insufficient mechanical properties of the coatings. The loss of crystalline HA after high temperature spraying is due mainly to the loss of OH^- in terms of water. The present study employed steam to treat HA droplets and coatings both during in-flight and flattening stages during plasma spraying. The microstructure of the HA coatings and splats was characterized using scanning electron microscopy, Raman spectroscopy, Fourier transform infrared spectroscopy, and X-ray diffractometry (XRD). Results showed that a significant increase in crystallinity of the HA coating was achieved through the steam treatment (e.g., from 58% to 79%). The Raman spectroscopy analyses on the individual splats and coatings indicate that the mechanism involves entrapping of water molecules by the individual HA droplets upon their impingement. It further suggests that the HA decomposition has already taken place before the impingement of the droplets on pre-deposited materials or the substrate. The improvement in crystallinity and phases, e.g., from tricalcium phosphate and amorphous calcium phosphate to HA, was achieved by reversing the HA decomposition through providing extra OH^- ions. Furthermore, the steam treatment during the spraying also accounts for remarkably increased adhesion strength from 9.09 MPa to 23.13 MPa. The in vitro osteoblast cell culture testing gives further evidence that the economical and simple steam treatment is promising with respect to improving HA coating structure and properties.