In the previous decade, a considerable amount of work has been done on the alumina-zirconia ceramic composite system with a particular emphasis on improving the mechanical properties utilizing the recognized toughening mechanisms. Zirconia-toughened aluminas (ZTA) can be regarded as a new generation of toughened ceramics; for example, a toughness of >12 MPa m0.5 has been obtained, compared with 3 MPa m0.5 for commercial alumina ceramics. The fracture strength of ZTA is also greatly in excess of that for alumina. The mechanical properties of ZTA are critically dependent on their microstructures, which can be designed in terms of specific applications and controlled by means of powder preparation and densification processes. This review also includes details of the possible future development of ZTA; these are expected to involve the development and measurement of the mechanical properties for high-temperature engineering applications.