This paper introduces an effect of a preparing $ZrO_2$-Ag composite on its mechanical properties and microstructure. In present study, $ZrO_2$-Ag was prepared by reduction-deposition route and wetting dispersive milling method, respectively. Two type of Ag powders (nano Ag and micron Ag size, respectively) were dispersed into $ZrO_2$ powder during wetting dispersive milling in D.I. water. Each sample was sintered at $1450^{circ}C$ for 2hr in atmosphere, and then several mechanical tests and analysis of microstructure were carried out by bending test, hardness, fracture toughness and fracture surface microstructure. As for microstructure, the Ag coated $ZrO_2$ showed homogeneously dispersed Ag in $ZrO_2$ in where pore defect did not appear. However, $ZrO_2$-nano Ag and $ZrO_2$-micro Ag composite appeared Ag aggregation and its pore defect, which carried out low mechanical property and wide error function value.