Partially stabilized zirconia (PSZ) has been studied extensively, due to its high-temperature stability and stress-induced tetragonal (T)-to-monoclinic (M) martensitic phase transformation. This T ⇒ M phase transformation has been well-documented for bulk PSZ, but limited data exist for PSZ thin films. Data will be presented that support a stress-induced T ⇒ M transformation mechanism that occurs during sputter deposition in the presence of a substrate bias. Substrate bias (0–50 W) was originally applied to increase film density, modify microstructure, and vary film stress. The films were deposited using radio-frequency magnetron sputtering from a sintered yttria-stabilized zirconia target and were subsequently characterized using scanning electron microscopy (SEM), transmission electron microscopy (TEM), x-ray diffraction (XRD), and wafer bow measurement (for stress analysis). With no substrate bias, the films exhibited a columnar grain structure that was consistent with sputter-deposited films, with a majority T phase as determined by XRD. Under higher substrate bias, wafer bow measurements indicated a steady increase in compressive stress as substrate bias increased (maximum, 310 MPa at 50-W bias), while XRD indicated a corresponding increase in the percentage of the M phase. Both SEM and TEM analyses revealed a shift from a defect-free columnar structure to one consisting of lateral intracolumnar or transgranular defects for films deposited under substrate-bias conditions. It is hypothesized that these defects form as a result of stress relief in the growing film via the T ⇒ M phase transformation due to bias-induced compressive stress.