Al 2O 3-ZrO 2 eutectics containing 0 to 12.2 mol% Y 2O 3 (with respect to zirconia) were produced by directional solidification using the laser floating zone (LFZ) method. Processing variables were chosen to obtain homogeneous, colony-free, interpenetrating microstructure for all of the compositional range, optimum from the viewpoint of mechanical properties. The amount of cubic, tetragonal, or monoclinic zirconia phases was determined using a combination of Raman and X-ray diffraction techniques. Monoclinic zirconia was present up to concentrations of 3 mol% Y 2O 3, while the amount of tetragonal zirconia gradually increased with yttria content up to 3 mol%. Cubic zirconia was the only phase detected when the yttria content reached 12 mol%. The residual stresses in alumina were measured using the shift of the ruby R lines. Compressive stresses were isotropie when measured in the samples containing tetragonal and cubic zirconia, while higher tensile, anisotropic stresses were found when monoclinic zirconia was present. They were partially relieved in the eutectic sample without yttria. These results were compared with a thermoelastic analysis based on the self-consistent model.