A near fully-dense ZrB2–ZrC composite was produced by SPS of ZrB2, Zr, and graphite powders. Advanced electron microscopy characterization was used to investigate the densification and sintering mechanisms, as well as the interfacial phenomena. Mechanical properties were studied through nano-indentation. The synthesis of ZrC is mainly controlled by a high fluidity liquid phase, which plays a crucial role in transferring the Zr atoms on the graphite flakes. Although such a liquid may be solidified as an amorphous interfacial phase during the cooling step, it effectively promotes composite toughening by a homogenous distribution of the in-situ synthesized phases. While a relatively weak hardness result (~11.3 GPa) was measured, a remarkably improved fracture toughness (~5.4 MPa.m1/2) was achieved. The outcomes of nano-indentation confirmed the paradoxical influence of amorphous interfacial phase on the mechanical behavior. Related discussions about the toughening mechanisms, interfacial phenomena, and nano-indentation behavior were also included and graphically presented.