The performance of plasma sprayed thermal barrier coatings (TBCs) is strongly dependent on the quality of the feedstock powders, which usually are fabricated by conventional spray drying and multi-step sintering methods. In this work, a novel supersonic plasma spheroidization technology was employed to fabricate the spherical nanocrystalline Sc2O3-Y2O3 co-stabilized ZrO2 (ScYSZ) powder. The deformation process from the irregular powder to the spherical one was stimulated by the COMSOL phase field simulation. The results suggested that the original irregular pyrolysis products of ScYSZ precursors were aggregated into spherical powders by plasma spheroidization technology. The COMSOL simulations verified that the powder changed from irregular particles to spherical ones. The spheroidized ScYSZ particles exclusively consisted of non-transformed t’-ZrO2 phase and showed good fluidity, smooth surface and high apparent density, which were expected to have a broader application prospect in the field of TBCs and other ceramic coatings.