Microstructure development during sintering in 3 mol% Y2O3-stabilized tetragonal ZrO2 polycrystal (Y-TZP) was systematically investigated in two sintering conditions: (a) 1100-1650°C for 2 h and (b) 1300°C for 0-50 h. In the sintering condition (a), the density and grain size in Y-TZP increased with the increasing sintering temperature. Scanning transmission electron microscopy (STEM) and nanoprobe X-ray energy dispersive spectroscopy (EDS) measurements revealed that the Y3+ ion distribution was nearly homogeneous up to 1300°C, i.e., most of grains were the tetragonal phase, but cubic-phase regions with high Y3+ ion concentration were clearly formed in grain interiors adjacent to the grain boundaries at 1500°C. High-resolution transmission electron microscopy (HRTEM) and nanoprobe EDS measurements revealed that no amorphous or second phase is present along the grain-boundary faces, and Y3+ ions segregated not only along the tetragonal-tetragonal phase boundaries but also along tetragonal-cubic phase boundaries over a width below about 10 nm, respectively. These results indicate that the cubic-phase regions are formed from the grain boundaries and/or the multiple junctions in which Y3+ ions segregated. We termed this process a “grain boundary segregation-induced phase transformation (GBSIPT)” mechanism. In the sintering condition (b), the density was low and the grain-growth rate was much slow. In the specimen sintered at 1300°C for 50 h, the cubic-phase regions were clearly formed in the grain interiors adjacent to the grain boundaries. This behavior shows that the cubic-phase regions were formed without grain growth, which can be explained by the GBSIPT model.