5 wt % submicron SiC particle reinforced 3 mol % yttria co-coated zirconia composites were prepared using hot pressing. The microstructure and properties of these composites have been investigated. The hot pressing temperature is a major factor that affects their mechanical properties. This can be ascribed to the monoclinic phase content in the composites. The monoclinic phase content increases with a decrease in the sintering temperature due to low yttrium diffusion. This increases the amount of transformation toughening produced by the residual tensile stress in the tetragonal phase. However, this residual tensile stress deteriorates the strength. The fracture is originated by the large cubic grain aggregates. The fine grained microstructure of the composite contributes to the high grain boundary electrical resistance.