Mullite-PSZ powders were synthesized by the sol-gel process using Al(sec-OC4H9)3, Si(OC2H5)4, ZrOCl2$.$8H2O and YCl3 solution and the characteristics of synthesized powders were studied. The sinterability and mechanical properties of powder compacts sintered at 1670$^{circ}C$ for 4hr were also studied for various PSZ contents. ${gamma}$-Al2O3(Al-Si spinel) formed at 980$^{circ}C$ from amorphous dried gel, and mullite as well as ZrO2 formed above 1200$^{circ}C$. At the room temperature, ZrO2 was a mixture of tetragonal and monoclinic phases. The specimens were densified to 97∼98% except the specimen containing 25 vol% PSZ which showed the relative density of 94%. The K1c value increased with the PSZ content and showed a maximum value of 4.1 MN/m3/2 at 25 vol% PSZ; this value was about 50% higher than that of the mullite without PSZ. Flexural strength had a maximum value of 280 Mn/㎡ at 20 vol% PSZ. In contrast, at 25 vol%, the flexural strength was even lower than that of the mullite possibly due to higher porosity of 6%.