Transition metal particles dispersed oxide ceramic nanocomposites A12O3/Co and ZrO2/Ni, in which metal content is less than 20 vol%, have been fabricated by the reduction and sintering of composite powders. These powder mixtures were prepared by solution chemical processes to obtain suitable structure for ceramic/metal nanocomposites. Nickel or cobalt nitrate, as a source of metal dispersion, was dissolved into alcohol and mixed with alumina or zirconia powder. These powders were reduced by hydrogen and successively hot press sintered. Nanometer-sized Co or Ni particles were mainly dispersed at the matrix grainboundaries. Fracture strength was improved by dispersing metal particles due to microstructural refinement, whereas toughness was increased by incorporating large metals. Ferromagnetic responses with enhanced coercive force were also observed for these composites.