Ceramic based nanocomposites can be divided into three categories: intragranular nanocomposite, intergranular nanocomposite and nano/nano composite. The intra- and intergranular nanocomposites, in which nano-sized particulates were dispersed within the matrix grains or at the grain boundaries respectively, were found to show the two to five times higher strength at room temperature than those of monolithic materials. The hardness, fracture toughness and fracture resistance for creep and fatigue at high temperatures as well as the thermal shock fracture resistance were also improved significantly in these nanocomposites. On the other hand, the new functions such as machinability and superplasticity were observed for the nano/nano composites. In this paper, the fabrication processes of these nanocomposites by sintering method, micro and nanostructure observation, improvements of mechanical properties were reviewed and the roles of the nano-sized dispersions were discussed. Finally, the new material design concept for multi-functional structural ceramics was given.