A computer program has been developed which simulates the process of stress-induced phase transformation and micro-cracking in two-phase (t+m) ZrO 2-Y 2O 3 ceramics. The procedure accounts for the complex interactions which occur between a propagating crack, particles produced by stress-induced t–m transformation and the transformation-induced micro-cracks. The transformation of particles and formation of microcracks lead to some changes of the stress field at the crack tip, and, as a result, a process zone forms around the main crack tip. The resulting crack resistance curves, or R-curves, associated with crack shielding mechanisms are generated by the program. Four variables, i.e. the original volume fraction of the m-phase ( f s) the dilantant strain associated with each micro-cracked particles (≡), the critical stress for inducing transformation (σ m c and for inducing micro-cracks (σ cR c), were used to determine their influence on fracture toughness. The results of the several calculations were compared and it was found that steady-state toughness was strongly dependent upon the variables. The results of the simulations were in good agreement with experimental results.