Al2O3-20 wt% ZrO2 composite powders to be used as the starting materials of the Al2O3/ZrO2-Spinel composite system were prepared by the use of the emulsion-hot kerosene drying method. The crystalline phase of ZrO2 in the synthesized Al2O3-ZrO2 composite powders was 100% tetragonal but the small amount of t-ZrO2 was transformed into m-ZrO2 after crushing. The hardness, fracture toughness, and flexural strength of the composite, which was sintered at 1650$^{circ}C$ for 4 hrs after calcining at 1100$^{circ}C$ for 2 hrs and had the relative density of 99%, were 15.7 GPa, 4.97 MN/m3/2, and 390 MPa, respectively. The fracture form in the sintered composites was found to be the intergranular fracture.