During process of plasma spraying of alumina with the stable α phase in the as-received powder, metastable γ phase tends to form in the as-deposited coating. In this paper, plasma-sprayed Al2O3 coating was investigated using transmission electron microscopy. In situ formation of γ-Al2O3 nanocrystals was observed in the pre-existing cracks of the as-sprayed Al2O3 coating, which contributes to self-repairing and self-toughening of the Al2O3 coating. Except for the predominant intergranular fracture, the pre-formed γ-Al2O3 nanocrystals would effectively obstruct the crack development in the coating and then the coating fracture toughness is enhanced.).