Yttria stabilized tetragonal zirconia polycrystal (Y-TZP)/0-100 vol % molybdenum (Mo) composites were fabricated by hot-pressing a mixture of Y-TZP powder containing 3 mol % yttria (Y2O3) and a fine Mo powder in vacuum. This composite system possessed a novel microstructural feature composed of an interpenetrated intragranular nanostructure, in which either nanometer sized Mo particles or equivalent sized zirconia (ZrO2) particles located within the ZrO2 grains or Mo grains, respectively. The strength and toughness were both greatly enhanced with increasing Mo content for the 3Y-TZP/Mo composites thus breaking through the strength-toughness tradeoff relation in transformation toughened ZrO2 and its composite materials. They exhibited a maximum strength of 2100 MPa and a toughness of 11.4 MPa . m(1/2) for the composite containing 70 vol % Mo. These simultaneous improvements in strength and toughness were determined to be the result of a decrease in flaw size associated with the interpenetrated intragranular nanostructure, and a stress shielding effect created in the crack tip by the elongated Mo polycrystals bridging the crack tip in addition to the stress induced phase transformation.