Partially stabilized zirconia (PSZ) agglomerate toughened alumina has been prepared by the "deflocculation-flocculation" technique, using 2 and 3 mol. % Y2O3-doped zirconia powders. Samples containing up to about 30 vol.% zirconia were obtained. The resulting microstructure seems to be mainly influenced by the physical properties of the starting powders, e.g. agglomerate size and the specific surface area. The mechanical properties, specially the strength of the samples are mainly limited by the flaws entering the microstructure through the differential sintering of the agglomerates relative to the surrounding matrix.