A gas turbine engine plasma blade tip clearance control system includes an annular shroud surrounding rotatable blade tips and an annular plasma generator spaced radially outwardly and apart from the blade tips. An exemplary embodiment of the annular plasma generator is mounted to the annular shroud and includes radially inner and outer electrodes separated by a dielectric material disposed within an annular groove in a radially inwardly facing surface of the annular shroud. The plasma generator is operable for producing an annular plasma between the annular shroud and blade tips and an effective clearance produced by the annular plasma between the annular shroud and blade tips that is smaller than a clearance between the annular shroud and blade tips.