A thermal barrier coating system and a method for forming the coating system on an article designed for use in a hostile thermal environment. The method is particularly directed to a coating system that includes a plasma-sprayed MCrAlY bond coat on which a thermal-insulating APS ceramic layer is deposited, in which the oxidation resistance of the bond coat and the spallation resistance of the ceramic layer are substantially increased by vapor phase aluminizing the bond coat. The bond coat is deposited to have a surface area ratio of at least 1.4 and a surface roughness of at least 300 &mgr;inch Ra in order to promote the adhesion of the ceramic layer. The bond coat is then overcoat aluminized using a vapor phase process that does not alter the surface area ratio of the bond coat. This process is carried out at relatively low temperatures that promote inward diffusion of aluminum relative to outward diffusion of the bond coat constituents, particularly nickel and other refractory elements. The process conditions also provide sufficient vapor phase activity at the surface of the bond coat that promote aluminum atomic movement through the bond coat.