Mullite-PSZ composite was prepared by sol-gel method using $Al(sec-OC_4H_9)_3,;Si(OC_2H_5)_4,;ZrOCl_2;8H_2O;and;Y_2O_3$. The sinterability ana mechanical properties of powder compacts sintered at $1,650^{circ}C$ for 4 hrs were investigated for various PSZ contents. In result Al-Si spinel formed at $980^{circ}C$ from amorphous dried gel, and zirconia as well as mullite crystal formed above $1,200^{circ}C$. The sintered body was densified to $97{sim}98%$ except the specimen containing 25vol% PSZ which showed the relative density of about 95% obtained by sintering at $1,650^{circ}C$ for 4 h. The flexural strength of the sintered body was a maximum value of 290 MPa in 20 vol% PSZ, which was also considerably larger than the value of 200 MPa without PSZ. The value of the fracture toughness increased linearly with increase of PSZ content and showed a maximum value of $4.3MPam^{1/2}$ in 25 vol% PSZ, Namely this value was remarkably larger than the $value(2.6MPam^{1/2})$ of pure mullite without PSZ.