A novel stabilizer coating technique was applied to prepare 1.0 mol% Nd2O3+1.0 mol% Y2O3-co-coated ZrO2 nanopowder from an alcohol/water-based suspension of neodymium nitrate, yttrium nitrate and monoclinic zirconia powder. The low stabilizer content starting powder could be fully densified into a (1Nd,1Y)-TZP ceramic when pressureless sintering in air at 1450 degreesC. The obtained ceramic revealed an excellent fracture toughness of 12.5 MPa m(1/2) in combination with a hardness of 10 GPa, a combination of properties that is comparable with that of the traditional 12 mol CeO2-stabilised tetragonal zirconia polycrystalline (TZP). The toughness could be further increased up to 14.3 MPa (.) m(1/2) by the addition of 2 wt.% Al2O3 to the starting powder. (C) 2004 Elsevier B.V. All rights reserved.