Two-component ceramic (alumina-zirconia) composites were fabricated by a soft-solution process in which polyethylene glycol (PEG) was used as a polymeric carrier. Metal salts and PEG were dissolved in ethyl alcohol without any precipitation in 1:1 volume ratio of alumina and zirconia. In the non-aqueous system, the flammable solvent made explosive, exothermic reaction during drying process. The reaction resulted in formation of volume expanded, porous precursor powders by a vigorous decomposition of organic components in the precursor sol. The PEG content affected the grain size of sintered composites as well as the morphology of precursor powders. The difference of microstructure in sintered composite was attribute to the solubility and homogeneity of metal cations in precursor sol. At the optimum amount of the PEG polymer, the metal ions were dispersed effectively in solution and a homogeneous polymeric network was formed. It made less agglomerated particles in the precursor sol and affected on uniform grain size in sintered composite.