The present study concerns development of yttria stabilized zirconia (YSZ), Al2O3 and a multilayer of Al2O3-YSZ thin film deposition by pulsed laser deposition (PLD) technique for its application as thermal barrier coating (TBC). The detailed study included characterization (microstructure, composition, phase and surface topography) of the thin film. The phase analysis of the YSZ films deposited at room temperature showed amorphous feature, while the film deposited at high temperature showed the formation of tetragonal phase. Residual stress analysis of the coating showed the presence of compressive stress and was maximum at 573 K (sigma(11) = -8.1 GPa and sigma(22) = -6.4 GPa). Residual stress was found to decease with increase in substrate temperature and was found to be lowest at 973 K (sigma(11) = -3.0 GPa and sigma(22) = -1.7 GPa). The cross-sectional morphology of the YSZ and Al2O3 thin films deposited at room temperature showed presence of inter-columnar porosities which changed to a dense structure with increase in substrate temperature.