Nanoindentation was used to determine room temperature Young's modulus and hardness of the top surface and cross section of an electron beam physical vapor deposited yttrium-stabilized zirconia layer. In situ observations of indentations inside a scanning electron microscope (SEM) chamber were used along with normalized cross correlation (NCC) to evaluate the degree to which indentation of a columnar microstructure can be affected by elastic structural deformation. It was found that (i) the top surface Young's modulus is roughly twice that of the cross section. (ii) Upon isothermal heat treatment at 1100 ยฐC for 80 h, an increase in Young's modulus and hardness occurred, to a greater degree in the bottom 20 ฮผm of the cross section, and in the top surface, which was attributed to preferential sintering in these zones. (iii) NCC analysis of SEM observations of nanoindentation in the cross section gave an estimate of the extent to which elastic structural deformation is a constituent of the measured displacement. It was found that depending on the indenter location relative to the columnar microstructure, an underestimation of the Young's modulus by as much as a factor of four can occur.