A　novel　method　was　proposed　to　achieve　uniform　dispersion　of　ZrO2　nanoparticles　in　the　WC　matrix.　The　prepared　WC-ZrO2　ceramic　exhibited　outstanding　mechanical　properties　with　simultaneously　high　hardness　and　fracture　toughness.　It　was　disclosed　that　the　high　toughness　of　the　present　WC-ZrO2　ceramic　results　from　the　contributions　of　stress-induced　phase　transformation　from　t-ZrO2　to　m-ZrO2,　the　homogeneous　ultrafine　microstructure　with　coherent　WC/ZrO2　interface,　and　the　stress　release　of　WC　in　the　vicinity　of　ZrO2.　The　later　two　factors　enhance　the　fracture　toughness　by　crack　deflection　and　crack　bridging.　In　particular,　the　contribution　to　toughness　by　phase　transformation　of　ZrO2　is　1.9　and　2.7　times　of　that　of　the　crack　deflection　and　crack　bridging,　respectively.　This　study　provides　a　strategy　to　increase　toughness　of　ceramics　greatly　while　keeping　its　high　hardness.