Yttria-stabilized cubic zirconia (YSZ)-palladium dual phase composites have been investigated. The percolative composite containing 40 vol% Pd (ZYPd40) showed a much larger oxygen permeability than that of the non-percolative composite containing 30 vol% Pd (ZYPd30). For a 2.0 mm thick percolative composite, an oxygen flux of 4.3 × 10−8 mol/cm2/s was measured at 1100 °C with oxygen partial pressures at the feed and permeate sides being 0.209 and 0.014 atm, respectively. This value is two orders of magnitude larger than that observed for a 2.0 mm thick non-percolative composite at the same temperature with the oxygen partial pressures at the feed and permeate sides being 0.209 and 1.5 × 10−4 atm, respectively. From the dependence of the oxygen permeation on the temperature and on the oxygen partial pressures, it was concluded that the transport of the oxygen ions through the YSZ phase in the percolative system was the rate limiting step.