Tetragonal zirconia polycrystal (TZP)/stainless steel 304 (SUS304)- and ZT [50 vol % monoclinic zirconia polycrystal (MZP) + 50 vol % TZP]/SUS304-functionally gradient material (FGM) were fabricated by pressureless sintering, and the sintering properties and residual stresses of this proposed FGM were compared with directly jointed material. The defects in the sintered specimens, such as warping, frustum formation, delamination, and cracking, which originated from the different shrinkage and sintering behavior of ceramic and metal, could be controlled by the adjustments in terms of the particle size and phase type of zirconia. The residual stresses induced on the ceramic and metal regions of FGM were characterized by the X-ray diffraction method, which were relaxed as the thickness and number of compositional gradient layers were increased. The residual stresses in TZP/SUS304-FGM show irregular patterns resulting from sintering defects and thermal expansion mismatch. In ZT/SUS304-FGM, compressive stress is induced on the ceramic regions by the volume expansion of MZP that resulted from the t --> m ZrO2 phase transformation on cooling. Also, compressive stress is induced on the metal regions by the constraint of warping and frustum formation that must be created to the metal direction caused by the difference of the coefficient of thermal expansions. As a consequence, it has been verified that the residual stresses generated on FGM are dominantly influenced by the thickness and number of compositional gradient layers, and the sintering defects and residual stresses can be controlled by the decrease of the difference of the shrinkage and sintering behavior of each component.