Detailed microstructural development of biaxially aligned yttria-stabilized zirconia (YSZ) films fabricated using ion beam assisted deposition is reported for the first time. The YSZ films in this study were deposited by ion beam assisted deposition onto Pyrex substrates. a columnar microstructure was exhibited in all the films studied. There are three populations of columns with (001) azimuthal orientation in the film microstructure. The (001) YSZ columns have a faceted dendritic microstructure, consistent with atom attachment at (101) layer source planes during growth from the vapor. Selected area electron diffraction from cross-sectional specimens indicates that most of the biaxial alignment is achieved within 100 nm of the substrate, with little improvement thereafter. The microstructural development of biaxial alignment is consistent with a previously proposed model involving anisotropic growth and extinction of the YSZ columns during ion beam assisted deposition.