The shuttle heat transfer is one of the reasons reducing the performance of Stirling engines. This study is concerned with the reduction in shuttle heat transfer by coating the displacer. The displacer of a gamma type Stirling engine was coated with a layer of yttria-stabilized zirconia (YSZ), and the effect of the coating on the engine performance was evaluated by comparing speed-power and speed-torque characteristics of the engine with coated and uncoated displacers. Characteristics were obtained for 700, 800 and 900 degrees C heater temperatures. At each stage of the heater temperature, the charge pressure ranged from I to 3.5 bars with 0.5 bar increments. At 900 degrees C heater temperature and 3 bars charge pressure, the shaft power before coating was 34.9 W, after coating the power increased to 43.8 W, which corresponds to a 25% increment. The temperature applied to the engine did not cause any damage on the coating layer. Copyright (C) 2008 John Wiley & Sons, Ltd.