Nanostructured alumina—20 vol% 3‐yttria‐stabilized zirconia (3YSZ) powder composites were synthesized by the wet‐milling technique. The starting materials were a mixture of alumina micropowder and 3YSZ nanopowders. The mixtures were optimized for good sintering behaviors, high hardness, and toughness. Nano‐crystalline grains were obtained after milling for 24h. The nano‐structured powders were then processed to full density at different temperatures by high‐frequency induction heat sintering. Effects of sintering temperature on the hardness, toughness, and microstructure properties have been studied. Al2O3–3YSZ composites with higher hardness, toughness, and smaller grain size have successfully been developed at relatively low temperatures by this technique.