In the present study, nickel particles are coated onto the surface of alumina powder by an impregnation technique. The densification behaviour and the microstructural evolution of the nickel coated alumina powder during sintering are investigated. The strength and the tough ness of the resulting Al2O3/Ni composites are determined. As the nickel content is less than 13 vol %, fully dense composites can be prepared by pressureless sintering. The matrix grain size decreases as nickel inclusions are added. The strength and the toughness of alumina can be increased by 23 and 42% by adding 5 and 8 vol% nickel, respectively. The toughening effect is attributed to plastic deformation of ductile inclusions and crack deflection by the inclusions. The strengthening effect is attributed to microstructural refinement.