The constitutive behavior of transformation plasticity in single phase fine grain Ce-TZP and polyphase coarse grain Mg-PSZ was studied. A material independent pressure sensitivity and a microstructure dependent strain rate sensitivity and temperature sensitivity were found to be associated with the transformation yield stress. Autocatalysis of various extent operates in all cases, forming broad macroscopic shear bands in TZP and fine crystallographic slip bands which terminate at grain boundaries in PSZ. Transformation plasticity is apparently athermal near the Mb temperature in TZP, but not in PSZ except in brittle fracture. A strong crystallographic texture of the transformed phase develops during deformation. These results are analyzed in terms of a shear-dilatant yield criterion and a rate equation which account for stress assistance in martensitic transformation. An elastic-plastic fracture mechanical model is developed to estimate both the shear and dilatation contributions to the transformation plastic work in the crack tip plastic zone. On the basis of approximately equal shear and dilatation contributions to transformation plasticity, the model predicts a transformation zone height which is four times that of the previous model, and a toughness increment which is two times that of the previous model. These predictions are found in good agreement with the reported toughness-zone size relationship. The effect of temperature and chemical stability on toughness is also rationalized.