In this study, the shape memory alloy of TiNb24Zr6 was firstly prepared and then introduced into WC-Co and a new type of WC-Co-TiNbZr composite was fabricated. The phase constitution, element distribution, microstructure, and mechanical properties were systematically characterized. It was found that the added TiNb24Zr6 reacted with the WC matrix and an intermediate (Ti,Nb)C phase formed during the sintering process. As a result, the shape memory effect of TiNb24Zr6 did not play a part in the plastic deformation of the composite. On the other side, the produced (Ti,Nb)C phase played a significant role in the mechanical behavior of the composite. Due to the difference in the elastic modulus between (Ti,Nb)C and WC, cracks deflection and bridging occurred in the vicinity of (Ti,Nb)C under mechanical loading. Moreover, the produced (Ti,Nb)C had a specific coherent interfacial relationship with the WC matrix, which enhanced the interfacial bonding strength and resistance against intergranular fracture of the composite. The hardness and fracture toughness of the present composite achieved 1943.5 ± 12.8 kgf/mm2 and 17.3 ± 0.5 MPa·m1/2 respectively, which are superior compared with those of the counterparts reported in the literature. The strengthening and toughening mechanisms disclosed in this study will be applicable to a wide range of WC-based composites to achieve excellent comprehensive mechanical properties.