Hydroxyapatite-zirconia composites have received much attention during the last decade due to their combination of the desirable mechanical properties of zirconia and the excellent bioactivity of hydroxyapatite (HA). However, thermal decomposition of the hydroxyapatite phase and reaction between the zirconia phase and the hydroxyapatite phase remain a major problem in the hydroxyapatite-zirconia composites. In this study, thermally stable and fluorine-substituted hydroxyapatite (Ca10(PO4)6(OH)0.8F1.2; coded as HA06F) was prepared by a sol-gel method to replace the hydroxyapatite. Yttria-stabilized zirconia (YTZP) was also prepared by a sol-gel method in order to produce HA06F-YTZP composites with 5, 10, 15, 20, 40, and 60 wt% YTZP by simple and cost-effective pressureless sintering. Thermogravimetric analysis (TGA) and x-ray diffraction (XRD) of the HA06F-YTZP composites showed that the thermal stability of the HA06F matrices could be maintained when the YTZP content did not exceed 20 wt% and for sintering temperatures less than 1400 oC. Dilatometric analysis and microstructural observation revealed that the YTZP phase in the HA06F-YTZP composites retarded the densification of the composites if the zirconia content was over 20 wt%. Electron scanning microscopy (SEM) and high resolution transmission electron microscopy (HR-TEM) of the HA06F-YTZP composites showed that the YTZP second phase had a size in the nanometer scale and the reaction between the HA06F phase and the zirconia phase was suppressed. Mechanical properties including the Knoop hardness, the Young’s modulus, and the fracture toughness of the HA06F-YTZP composites increased with the YTZP content until the optimal content of 20 wt%; higher YTZP contents led to low mechanical properties due to poor densification of the composites and the severe thermal decomposition of the HA06F phase. The optimal HA06F-20YTZP composite also showed desirable attachment and proliferation of osteoblast cells. Nevertheless, the study of the composite system indicated the limitations of the pressureless sintering technique. To achieve the full potential of the composites for medium or low load bearing applications, a pressure-assisted sintering technique would still be necessary.