The residual stress distribution in plasma-sprayed zirconia thermal barrier coatings subjected to cyclic thermal gradient testing was evaluated using Raman piezospectroscopy and finite element computation. The thermal gradient testing (approximately at temperature), consisted of repeated front-side heating with a flame and constant cooling of the back-side of the substrate either with front-side radiative cooling only or with additional forced air cooling between the heating cycles. The coatings exhibited characteristic “mud-cracking” with the average crack spacing dependent on the cooling treatment. This is consistent with finite element calculations and Raman spectroscopy measurements in which the sudden drop in coating surface temperature on initial cooling leads to a large biaxial tension at the surface. The key to proper interpretation of the Raman shifts is that the stress-free Raman peaks need to be corrected for shifts associated with the evolution of the metastable tetragonal phase with aging.