The fracture toughness and ageing resistance of yttria, ceria-stabilized tetragonal zirconia polycrystals (Y, Ce-TZP) were evaluated as a function of grain size and ceria content. Very fine grained, fully dense materials could be produced by sinter forging at relatively low temperatures (1150–1200 °C). The ageing resistance in hot water (185 °C) of 2 mol% Y2O3-stabilized TZP is strongly enhanced by alloying with ceria. The ceria content necessary to avoid degradation completely, decreases with grain size. The toughness of fully dense Y, Ce-TZP is 7–9 MPa m1/2 for grain sizes down to 0.2 mgrm. No or very little transformation took place during fracturing and no clear variation with grain size was observed for the toughness at grain sizes up to 0.8 mgrm. Reversible transformation and crack deflection may explain the observed toughness values.