Al2O3 particle dispersed 3Y-TZP nanoceramics doped with TiO2 was fabricated by the vacuum reduction of Ti(OH)4, Al(NO3)3 and 3Y-TZ powders at 873K for 2h and sintered in air at 1573K~1823K for 2-6h. The relation between Al2O3 and TiO2 content, sintering parameters, relative density and grain sizes were studied. Microstructural investigations revealed that, in comparison with direct powder mixing, the reduction method is more efficient in achieving a homogeneous dispersed fine alumina second phase, which results in the reduction of matrix grain size and the increase of the relative density of the 3Y-TZP ceramic. TiO2 addition facilitates the sintering process but may cause significant abnormal grain growth which can be offset by the homogeneity of the powder dispersion. A final 3Y-TZP-TiO2 ceramic matrix with grain size below 500nm dispersed with ultrafine second phase Al2O3 was obtained.