Continuous three step heating process consisted of decomposition, hydrogen reduction and hot-pressing of 3Y-TZP/NiO(or CoO)/TiH2 powder mixtures has been attempted to obtain 3YTZP/NiTi and 3Y-TZP/CoTi composites. Intermetallic compounds Ti-Ni or Ti-Co binary systems were homogeneously dispersed in Y-TZP matrix. Fracture strength of 3YTZP/30vol%NiTi composite sintered at 1200°C has reached 680MPa that is much higher than the monolithic 3Y-TZP sintered for the same condition. The fracture strength, however, decreased with the increase in sintering temperature above 1300°C. For 5vol% CoTi reinforced 3Y-TZP composite, the fracture strength has increased up to 800MPa. However, when carbon nanotubes (CNT) mixed with this composite system the fracture strength did not improve, because of incomplete reaction and the residual amounts of Co and Ti particles.