ZrO2-ZrC-C (ZrCO) ceramic microspheres were fabricated by a combination of internal gelation and carbothermic reduction. The effects of temperature on carbothermic reduction of ZrO2 and the CO content in the heat treatment atmosphere on the phase composition, microstructure and properties of the microspheres were studied. The effects of different concentrations of CO in the reaction atmosphere on the formation of zirconium carbide were analyzed. The results indicate that addition of a small concentration of CO in the heat treatment atmosphere refined the microstructure, and high concentration of CO inhibited the formation of ZrC. Crack-free ZrCO ceramic microspheres with uniform microstructure, improved crush strength and density were successfully fabricated with C/Zr = 3 in the broth and heat treated at 1550 degrees C for 4 h in argon containing 5%CO.