In order to fabricate SOFC fuel electrodes, which were composed of a fine homogeneous microstructure of Ni/YSZ, plasma spraying of Ni/YSZ mechanically alloyed composite powders was carried out. To perform this, the oxidation heat treatments of the MA powder were introduced. Some properties, for example, conductivity and gas permeability, of the coatings obtained were measured, and the applicability of MA powders to the fuel electrodes was evaluated. The results obtained are summarized as follows: (1) The oxidation heat treatments to the MA powders were seemed to be effective in both suppression of the separation between Ni and YSZ and maintenance of the initial composition of the powder. Fine-microstructure fuel electrodes were fabricated by the spraying of pre-oxidized MA powders. (2) The relation between conductivity of the coating and reduction time at 1273 K was measured. In the coating made from 72 ks MA and 50%Ni contained powders, as the reduction time increased the conductivity increased gradually, and the conductivity of this coating reached the maximum value of 90 kS/m finally. (3) The gas permeability of the coatings made from MA powders were smaller than that of the coatings made from conventional agglomerated powders. This could be improved by controlling the process parameters such as spraying conditions.