The tetragonal (t) to monoclinic (m) transformation behaviour and its relationship to microstructural evolution were investigated by means of dilatometry and transmission electron microscopy for ZrO2-9.7 mol% MgO during cyclic heating and cooling between room temperature and 1490 K. In the as-sintered specimens, fine oblate ellipsoidal t-phase precipitates, 20-50 nm in diameter and 100-200 nm long, were distributed in the cubic (c)-phase matrix. They were below a critical size for transformation and exhibited no transformation in the first three cycles.; In the fourth and further cycles, transformation occurred in two distinct stages. A low-temperature stage appeared at 850-1000 K on heating and at 400-700 K on cooling, while a high-temperature stage appeared at 1350-1400 K on heating and at 1000-1200 K on cooling. With the increasing number of cycles, at first the size of low-temperature stages increased and then decreased above ten cycles accompanying the development of the high-temperature stage. During cyclic heating and cooling, coarsening of ellipsoidal precipitates and decomposition of c- and t-phases occurred. As a result of the decomposition, MgO particles and a new m-phase containing a very low concentration of MgO were produced. The coarsened ellipsoidal t-phase precipitates were responsible for the low-temperature stage. The new m- or t-phase containing very low MgO produced by the decomposition was responsible for the high-temperature stage.