The effect of stress induced phase transformation on $Al_2 O_3$ matrix dispersed with $ZrO_2-Y_2O_3$ has been studied. In order to determinate the mechanical properties three $Al_2O_3-ZrO_2$ composite series containing 1, 3 and 5 mole% $Y_2O_3$ were prepared. The starting materials were $Al_2O_3$ and $ZrO_2-Y_2O_3$ which was prepared from the aqueous solution of high purity $YCl_3$.$6H_2O$ and $ZrOCl_2$.$8H_2O$. Powder mixtures of $Al_2O_3-ZrO_2$ containing $Y_2O_3$ have been prepared by ball-milling with methanol and the samples were formed by isostatic press and sintered at 150$0^{circ}C$ for 2hrs. After sintering. the specimens were polished for mechanical determination. The relative density of sintered specimens were also measured. It was found that the addition of 1, 3mole% to {{{{ { ZrO}_{2 } }} allowed full retention of the tetragonal phase in $Al_2O_3-ZrO_2$ but partially stabilized zirconia (PSZ) was produced by additions of 5 mole% $Y_2O_3$.The critical stress-intensity factor KIc of $A_2O_3-ZrO_2$ (containing 1 mole% $Y_2O_3$) composite materials increased with increasing $ZrO_2$ content, The maximum value of KIC=7Mn/$m^3$/2 at 20 mole% $ZrO_2$ exhibited about twice that of the $Al_2 O_3$ The modulus of rupture exhibited a trend similiar to KIC The maximum value of MOR was 580MN/m2. As the amount of Y2O3 increase it was observed that the maximum of KIC and MOR decreased : Additions of 3 mole% $Al_2O_3$ $Y_2O_3$ allowed the maximum of KIC 6MN/$m^3$/2 MOR 540MN/$m^2$ at 15 mole% $ZrO_2$ additions of 5 mole% $Y_2O_3$ allowed the maximum of KIC 5MN/$m^3$/2 MOR 410MN/$m^2$ at 10 mole% $ZrO_2$.