The formation of thermal stresses by plasma spraying is generally considered as adverse. Therefore, the knowledge of stress distribution in the deposited layer during and after plasma spraying will be of special interest. In this study finite difference heat transfer analysis and finite element stress analysis were carried out to predict the change of stress distribution in the plasma coated layer with the variations of preheat temperature, number of scan, particle size, and bond coat. The results of the numerical analysis were as follows: 1) Transient stresses developed in the coated layer were up to the level of yiedl strength at the temperature. 2) The tensile stresses were developed in the deposited layer and the surface of the substrate, but the compressive stresses were developed in the rest of the substrate. 3) Transient and residual stresses were significantly affected by the preheat temperature. 4) The variations of temperature of powder particle and number of torch scan changed tensile stress distribution, but made no difference on the magnitude of the stresses. 5) Bond coated layer reduced the stree level of deposited layer.