Y2O3-stabilized tetragonal zirconia polycrystalline (TZP) ceramics containing 1-5 mol% Y2O3 were prepared by hot pressing and pressureless sintering of sol-gel-derived powders. Sintered ceramics were evaluated for their density, grain and crystallite size, width of transformation zone, crystalline phases and mechanical properties. Variation in the values of fracture toughness and flexural strength has been explained on the basis of crystallite size and proportion of transformable tetragonal phase, which are influenced by the concentration of Y2O3 in TZP ceramics. Correlation of the data has indicated that the transformable tetragonal phase is the key factor in controlling the fracture toughness and strength of ceramics.