The study examines the effect and mechanism of 3Y–ZrO2 addition on the phase composition, microstructure, and mechanical properties of Al2O3–ZrO2 ceramics. The ceramics were sintered at 1580°C for 120 min, comprising varying proportions of 20, 40, 60, and 80 wt.% of 3Y–ZrO2. The study investigates the phase composition, phase content, microstructure, relative density, microhardness, fracture toughness, and wear rate of the ceramics. Notably, Al2O3–ZrO2 ceramics demonstrated a dense surface with evenly distributed reinforcing particles in the matrix. The microhardness and wear rate of Al2O3–ZrO2 ceramics declined with increased 3Y–ZrO2 addition; in contrast, the bending strength, abrasion resistance, and fracture toughness increased with the addition of 3Y–ZrO2. Alumina grain refinement, crack propagation inhibition, and microcrack toughening induced by tetragonal-to-monoclinic phase transformation are the primary factors influencing these changes. Meanwhile, as the content of 3Y–ZrO2 increases, the fracture mode of Al2O3 shifted gradually from transgranular to intergranular, whereas ZrO2 maintained predominantly transgranular fracture.