The effect of grain size on the time-dependent piezoelectrice degradation of a poled PZT of MPB composition Pb0.988Sr0.012 (Zr0.52Ti0.48)O3 with 2.4 mol% of Nb2O5 was studied, and the degradation mechanism was discussed. Changes in the internal bias field and the internal stress both responsible for the time-dependent degradation of poled PZT were examined by the polarization reveral technique, XRD and Vickers indentation, respectively. The piezoelectric degradation increased with increasing time and grain size, and the internal bias field due to space charge diffusion decreased with increasing grain size of poled PZT. The internal bias field, however, was almost insensitive to the degradation time regardless of the grain size. On the other hand, both the x-ray diffraction peak intensity ratio of (002) to (200) and the fracture behavior including the crack propagation support that the ferroelectric domain rearrangement of larger grain size showed rapid relaxation of the internal stress compared with smaller one, which is thought the origin of the larger piezoelectric degradation in the former. In conclusion, the contribution of space charge diffusion on the piezoelectric degradation of PZT is strongly dependent on both the grain size and the composition. Thus, the relaxation of internal stress due to the ferroelectric domain rearrangement as well as the amount and time-dependence of the internal bias field due to space charge diffusion should be considered simultaneously in the degradation mechanism of PZT.