High Temperature wear behavior of plasma sprayed zirconia coatings containing up to 10 mol% of Fe$_2$O$_3$ were investigated. The wear test results showed that the addition of Fe$_2$O$_3$ particles to zirconia improved the wear resistance and lowered the coefficient of friction. Optimum concentration of Fe$_2$O$_3$ was about 5 mol%. Similar degradation behavior was observed at about 40$0^{circ}C$ for both zirconia and Fe$_2$O$_3$ added zirconia coatings. The results indicated that stabilization of tetragonal phase and changes in mechanical properties such as hardness and toughness were responsible for tribological behavior of plasma sprayed zirconia contain Fe$_2$O$_3$.