Manufacturing methods to create ceramic coatings with tailored thermal conductivity are crucial to the development of thermal protection systems for many components including turbine blades in high temperature engines. A designed microstructure of grains, pores, and other defects can reduce the thermal conductivity of the ceramic. However, the same microstructure characteristics can reduce mechanical properties to the point of failure. This work is part of a larger program with the goal of optimizing ceramic coating microstructure for thermal protection while retaining sufficient mechanical strength for the intended application. Processing parameters have been examined to identify methods designed to maintain a nano-sized grain structure of yttria-stabilized zirconia while controlling the added porosity with a specific shape and size. In this paper computational modeling is used to evaluate the effects of porosity on coating performance, both thermal and structural. Coating porosity is incorporated in the computational models by randomly placing empty spaces or defects in the shape of spherical voids, oblate pores, or penny cracks. In addition to computational modeling, prototype coatings are developed in the laboratory with specific porosity. The size and orientation of defects in the computational modeling effort are statistically generated to match experiments. The locations of the defects are totally random. Finite element models are created which include various levels of porosity to calculate effective thermal and mechanical properties. Comparisons are made between three-dimensional finite-element simulations and measured data. The influences of pore size as well as three dimensional computational modeling artifacts are examined.