$Al_2O_3-ZrO_2$ ceramics was obtained by the co-precipitation method using $Al_2(SO_4)_2$.$18H_2O$ and $ZrOCl_2$.$8H_2O$ as starting materials $MgCl_2$.$6H_2O$ as a sintering aid and NH4OH as a hydrolyzing agent. The coprecipitate from the above raw materials was calcined at 125$0^{circ}C$ for 1h and again sintered at 1$650^{circ}C$ for 2h before measurements of strength hardness and fracture toughness. MgO addition was found to increase mechanical properties of the $Al_2O_3-ZrO_2$ system. The strength and frac-ture toughness of $Al_2O_3-ZrO_2$ ceramics were considered to be increased by stress-induced phase tranforma-tion of $ZrO_2$