Zirconia-nickel composite materials were fabricated by powder processing technique and pressureless sintering. A tensile testing machine with a scanning electron microscope was utilized to study the deformation and fracture behaviors of the materials. Tensile tests were performed on dumbbell type specimens in vacuum at temperatures up to 800°C. Stress-strain relationships were determined for the composites as functions of temperature and volume fraction of ZrO2. The result showed that both the tensile strength and elongation to fracture decreased as the test temperature increased. It was also found that the strength increased with increasing volume fraction of ZrO2 up to 50%. To understand such effects, the deformation and fracture behaviors were investigated from microscopic view points through in-situ observation of the specimen surface and the fracture surface examination.