Climate change mitigation requires advances in energy efficiency. Thermal barrier coatings (TBCs) are widely employed to improve thermal efficiency in gas turbines and internal combustion engines, and engineering coatings’ porosity is an important route to control the heat transfer to metallic components. In this study, porous gadolinium zirconate (Gd2Zr2O7, GZO) coatings were produced using air plasma spraying (APS) with polyester as a pore-forming agent. A systematic investigation was carried out to evaluate the influence of stand-off distance, polyester particle size, and polyester content on the microstructure, porosity, thermal conductivity, and erosion resistance of the composite coatings. Results demonstrated that porosity increased with spraying distance and higher pore former content, reaching up to 50% porosity at 20 wt.% polyester addition. Enhanced porosity led to a significant reduction, up to 80%, in thermal conductivity compared to dense GZO coatings, with larger pores showing a more pronounced effect. However, erosion tests revealed that while moderate polyester additions improved erosion resistance due to crack-arresting effects, higher porosity levels reduced mechanical integrity and accelerated material loss, particularly after polyester burn-out post-treatment. These findings highlight the balance required between optimizing thermal insulation and maintaining erosion resistance, providing new insights into the design of high-performance porous TBCs.