It was Niihara et al. who first discovered that the fracture strength of Al2O3 can be increased by incorporating as little as 5 vol.% of nano-size SiC particles (>1000 MPa), and that the strength would be improved further by a simple annealing procedure (>1500 MPa). This discovery has stimulated intense interest on Al2O3/SiC nanocomposites. Recent indentation studies by Fang et al. have shown that residual stress relief was more difficult in the nanocomposite than in pure Al2O3. In the present work, TEM was employed to investigate the microscopic mechanism(s) for the difference in the residual stress recovery in these two materials.Bulk samples of hot-pressed single phase Al2O3, and Al2O3 containing 5 vol.% 0.15 μm SiC particles were simultaneously polished with 15 μm diamond compound. Each sample was cut into two pieces, one of which was subsequently annealed at 1300° for 2 hours in flowing argon. Disks of 3 mm in diameter were cut from bulk samples.