Centrifugal casting method was used to fabricate composites with graded structures in alumina-zirconia system. The composition profiles of the graded composites showed three distinct regions, with a greater part of the specimen showing nearly linear variation of compositions. The composition profile can be varied by using zirconia powder of different size ranges. The top of the specimens showed nano-scaled microstructures. The composition profiles can also be varied by altering zirconia content in the starting suspension. It was found that the composites with graded structures showed higher bending strength than that of uniform composites. On the other hand, the specimens fractured with the lower zirconia content region being the crack initiate plane showed higher bending strength than that of fractured form higher zirconia content region.