The microstructure of the Al₂O₃–ZrO₂ eutectic with addition of a small amount of Y₂O₃ has been studied. The eutectic composition was determined as 59 mol%Al₂O₃–36.8 mol%ZrO₂–4.2 mol%Y₂O₃. The added Y₂O₃ (2.1–5.3 mol%) dissolved only in the ZrO₂ phase and the crystal structure of this phase changed from monoclinic to tetragonal+cubic and cubic depending on the amount of Y₂O₃. Several orientation relationships were found between the ZrO₂ and Al₂O₃ phases. The Al₂O₃–ZrO₂ eutectic contained twins in the ZrO₂ phase. Cracks were observed in the Al₂O₃ matrix and at the Al₂O₃/ZrO₂ interface. The orientation relationship between monoclinic ZrO₂ and Al₂O₃ can be interpreted to be affected by the difference in the thermal expansion coefficient between ZrO₂ and Al₂O₃.