Rapidly solidified ZrO2 (Y2O3)-Al2O3 powders were prepared by melting fine-particle aggregates in a high-enthalpy plasma flame and then rapidly quenching them in cold water or on a copper chill plate. To ensure complete melting and homogenization of all the particles before quenching, the water-quenching treatment was often repeated two or even three times. The resulting melt-quenched powders and splats displayed a variety of metastable structures, depending on composition and cooling rate. ZrO2-rich material developed an extended solid solution phase, whereas eutectic material formed a nanofibrous or amorphous structure. Under high cooling rate conditions, the ZrO2-rich material developed a nanocomposite structure (t-ZrO2 + alpha-Al2O) directly by melt-quenching, whereas, more typically, such a structure was developed only after postannealing of the as-quenched metastable material.