Alumina-based nanocrystalline powders with different ZrO2 amounts were produced for the first time by hydrothermal synthesis in an alkaline environment for designing zirconia toughened alumina (ZTA) composites. In ZTA composites, ZrO2 solid solution particles codoped with ceria and yttria are distributed in a rigid Al2O3 matrix. To examine the physicochemical properties, 90 wt.% Al2O3-10 wt.% ZrO2 (Y2O3, CeO2) and 58.5 wt.% Al2O3-42.5 wt.% ZrO2 (Y2O3, CeO2) powders were used. The ZrO2 solid solution had composition 90 mol.% ZrO2-2 mol.% Y2O3-8 mol.% CeO2. The hydrothermal powders were heat treated in the temperature range 400-1450 degrees C and examined by X-ray diffraction, differential thermal analysis, and electron microscopy. The powder specific surface area was determined by the BET method. The sizes of primary particles were determined with the Scherrer equation. The AMIC software (Automatic Microstructure Analyzer) was employed to process the morphology analysis results. The phase transformations and active sintering of the ZTA powders determined the dependences showing the sizes of primary particles and the specific surface area of the powders versus the heat treatment temperature. With higher ZrO2 content, temperature of the F-ZrO2 -> T-ZrO2 phase transformation decreased, the likelihood of M-ZrO2 to emerge increased, and the sequence of Al2O3 phase transformations changed after the boehmite had decomposed. The variation in the morphology and specific surface area of the powders in the heat treatment process indicated that their sintering activity increased. The dependence of the shape factor characterizing the nanocrystalline 90AZG and 58.5AZG powders on the heat treatment temperature was studied. The starting nanosized 90AZG and 58.5AZG powders had a similar distribution of agglomerates according to the shape factor. Round agglomerates and multifaceted regular agglomerates were predominant. The way in which the shape factor of the agglomerates varied with temperature was associated with a topochemical memory effect manifested by the 90AZG and 58.5AZG powders were examined. With increasing ZrO2 content, the microhardness of the ZTA composites decreased from 195 to 160 MPa, fracture toughness (KIc) increased from 6 to 8 MPa center dot m0.5, and Vickers hardness decreased from 8.3 to 5.6 GPa. The improvement in consolidation methods for ZTA composites will allow tool, structural, and functional ceramics with the required properties to be produced.