Recently, co-powder injection molding process (2C-PIM) has attained considerable interest to fabricate complex-shaped functional materials. The aim of this work is to study the sintering compatibility between nanocrystalline yttria-stabilized zirconia (3Y-TZP) and PIM grade 430L stainless steel (SS) powders, which is the utmost important step in the 2C-PIM process. To evaluate the mismatch strain development during the co-sintering, the isothermal and nonisothermal behaviors of the ceramic and metal powders were studied. Small bilayers of 3Y-TZP/430L were made by a powder metallurgy technique and the feasibility of simultaneous sintering and joining of the composite layer was examined. Electron probe micro-analyzer (EPMA) was used to study the joint interface. The shear strength of the bond was tested by a shear-punch instrument. It is shown that the amount of mismatch sintering shrinkage between the zirconia ceramic and SS powder during sintering can be as high as 9.7%. Meanwhile, sintering in vacuum induced lower mismatch strain compared to argon sintering. It is also shown that formation of a liquid phase by boron addition to the SS layer could assist bonding. The liquid phase accommodates the mismatch sintering shrinkage and ease materials transfer at the interface. EPMA analysis confirmed the interlayer diffusion of Zr, Fe, and Cr during sintering to form a ternary Zr-Fe-Cr oxide interface.