The relationship between the fracture toughness increment (ΔK IC) resulting from toughening mechanisms, such as phase transition, residual stress, geometry effect, and grain bridging, and the volume fraction of zirconia was established to simulate and design the composition of a zirconia-matrix composite tool, thereby avoiding “trial-and-error” experiments. The composition of the ZrO2/Al2O3 ceramic tool was simulated in accordance with the requirement for fracture toughness. It was shown that the simulated result was in agreement with experiment and that the established simulation model was to some extent valid in predicting the composition of the zirconia-matrix composite ceramic tool with dispersed α-Al2O3. Thus, a new type of ceramic tool material, a ZrO2/Al2O3 composite, was developed by adding α-Al2O3 to ZrO2 on the basis of the results of the computer simulation.