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Thermal barrier coatings (TBCs), which protect metallic components from high-temperature environments, have been widely applied to the fields of high-temperature and corrosion-resistant structural parts such as gas turbine engines, diesel engines, and power generation systems. Yttria-stabilized zirconia (YSZ) is one of the most widely used materials for TBCs owing to its excellent shock resistance, low-thermal conductivity, and relatively high coefficient of thermal expansion. In this paper the properties of YSZ and the recent developments of YSZ-TBCs are reviewed. The failure mechanism of YSZ-TBCs and corresponding methods for lengthening the lifetime of YSZ-TBCs are discussed. The advantages of graded thermal barrier coatings and the problems in processing are elucidated.