The effect of high-temperature exposure on the t' phase transformation and indentation toughness in zirconia with 8 mol% REO1.5 (RE = Gd and Y) was studied. Dense compacts prepared by spark plasma sintering were subjected to thermal exposure at 1150 A degrees C up to 96 h. As-processed materials comprising of the t' phase exhibited high indentation toughness: GdSZ 117 +/- 8 Jm(-2) and YSZ 98 +/- 9 Jm(-2). Upon thermal exposure, toughness decreased initially and then increased gradually. After 96 h, GdSZ showed a higher toughness compared to YSZ. Ferroelasticity remains the dominant mechanism, although onset of transformation toughening was observed in GdSZ by 96 h. Two tetragonal phases appeared in GdSZ. The minor tetragonal phase is likely an artifact of coherency strains between the cubic precipitates and tetragonal matrix. The matrix tetragonal was depleted in GdO1.5 with time. Consequent increase in tetragonality led to enhanced ferroelastic toughening. The transformations in YSZ occurred much slower than in GdSZ; hence, the toughness recovery was slower as well.