In current work, bimodal thermal barrier coatings (TBC) were deposited via atmospheric plasma spraying (APS) using Al2O3 as matrix, reinforced with 20 wt% of ZrO2 and 4 wt% of carbon nanotubes (CNT) over Inconel 718 substrate. The objective is to study the effect of bimodality and reinforcements on mechanical and tribological behaviour of Al2O3 based thermal barrier coatings (TBC). Al2O3–ZrO2, Al2O3–ZrO2-CNT and micro-Al2O3 coatings named as AZ, AZC and μ-Al2O3, respectively. Presence of partially melted and solid-state sintered nanostructured region (NR) with fully melted and re-solidified microstructured regions (MR) showed bimodal microstructure. Reinforcements leads to enhance nano-hardness and plasticity index from (12.8 GPa, 0.12) for μ-Al2O3 to (14.7 GPa, 0.17) for MR of AZ and (14.1 GPa, 0.17) for AZC, which is attributed to higher amount of α-Al2O3 and t-ZrO2 present after coating deposition. Nanostructured regions reduce shear stress generation under 10 N load during fretting wear in AZ (293.8 MPa) and AZC (298.7 MPa), resulting in a more uniform surface and reduced wear rate. Additionally, the higher aspect ratio and lubrication effect of CNTs in AZC generates least energy dissipation (92.9 J) and wear rate (0.9 × 10−6 mm3N−1m−1). SEM and EDS analysis of worn surfaces in coatings and counter body revealed abrasive, adhesive wear is dominant in μ-Al2O3 than AZ and AZC coatings due to presence of larger wear debris and more material transfer from coating to Si3N4 body than AZ and AZC. Overall, the synergistic effect of bimodality and reinforcements leads to improved mechanical property, reduces energy dissipation and shear stress generation during wear makes APS-AZC coating a potential material for wear and high temperature environment.