Pure BaTi03 exhibits a paraelectric-to-ferroelectric phase transition at 130°C. When stoichiometric BaTi03 is combined with 10 mol% Zr02, the relative permittivity (E,) changes to a broad, relatively insignificant temperature dependence, and the Curie point, Tc, is not sharply defined. However, the transition sharpens at T = 95°C when these samples are sintered for a longer period of 60 h. SEM, EDAX analysis coupled with TEM observation gives three types of core-shell structures of different microstructural characteristics which are related to the diffuse phase transition. Chemical inhomogeneity, due to Zr4+ distribution in the core-shell structure, is proposed to account for the diffuse phase transition behavior. [