Al2O3/Co composites were fabricated by vacuum hot-pressing a mixture of alpha-Al2O3 powder and a fine cobalt powder. Submicron-sized cobalt particles were uniformly dispersed into the Al2O3 matrix, and the dispersed type was a more inter-/intragranular one with increases of cobalt content up to 40 wt % Co addition. The growth of cobalt particles occurred with increasing cobalt content. At 50 wt % Co addition, however, the growth as well as coalescence of cobalt particles occurred. The phases formed in the Al2O3/Co composites were f-Co(fcc), h-Co(hcp), alpha-Al2O3, and a small amount of graphite. Significant improvements in bending strength (from 341 to 771 MPa) and fracture toughness (from 3.7 to 6.7 MPa . m(1/2)) of the Al2O3/40 wt % Co(23 vol % Co) composite compared to monolithic Al2O3 were achieved by dispersing submicron-sized Co particles into the Al2O3 matrix. The improvement in bending strength was attributed to the compressive thermal residual stress in the matrix Al2O3 induced by the mismatch of the coefficients of thermal expansion (CTE) between the matrix Al2O3 grains and cobalt particles during cooling from hot-pressing temperature. The fracture tough ness of the composite was enhanced by crack bridging, crack deflection, and compressive thermal residual stress.