The design and the fabrication of novel stair-step electrolyte based on yttria stabilized zirconia are presented. The novel electrolyte has gradually reduced oxide ion transport paths achieved by the stair-step design. The mechanical and electrochemical performance of the novel electrolyte are investigated and compared to those of standard electrolyte support. Three-point bending tests indicate that the fracture displacement and force measured for the novel electrolyte are 11% and 32% less than those of the standard electrolyte support, respectively. However, the cell based on the novel electrolyte exhibits 40% higher electrochemical performance than the standard electrolyte supported cell at an operation temperature of 700 °C. Impedance analyses revealed that the enhanced cell performance is mainly due to the decrease in the ohmic resistance of the cell achieved by the novel electrolyte design. In addition, the electrode resistances are found to be decreased due to the increased electrochemical reaction zones since the contact area between the novel electrolyte and both electrodes are increased by the novel electrolyte design. Moreover, the cell with novel electrolyte produced 0.47 Wcm−2 peak power at 750 °C while the standard electrolyte supported cell shows almost the same power output at around 800 °C. Thus, novel designed electrolyte also offers some amount of reduction in the operation temperature of solid oxide fuel cells. Copyright © 2012 John Wiley & Sons, Ltd.