The influence of grinding surface stresses in Y-TZP doped with 2.5% molar yttria on the contact loading response has been studied. It is shown that by grinding with different pressures compression residual stresses are induced in a surface layer of about 10 µm in depth. Their effect is manifested by shorter indentation cracks in ground specimens, but they recover the original lengths of annealed specimens after a surface thin layer is removed by polishing. The response to cyclic contact loading with a ball of 1.96 mm in diameter has been studied by looking to the damage that takes place below the indenter, as well as by measuring the flexure biaxial strength after 1, 103 and 105 cycles and for different load amplitudes. It is found that there is a threshold load, that is, a maximum contact load below which there is no degradation in the strength. This threshold is lower when transformability is higher and it depends on the number of contact cycles. But after a given large number of cycles, no further important additional degradation takes place. Under repeated contact loading in annealed specimens at loads for which a marked degradation in strength is detected, nucleation and growth of like-radial cracks is the main cause for the loss of strength, while for of ground specimens the extension of these defects is impeded by the compression surface residual stresses.