Partially-stabilized ZrO2 (PSZ) ceramics have considerable potential for advanced structural applications because of their high strength and toughness. These properties derive from small tetragonal ZrO2 (t-ZrO2) precipitates in a cubic (c) ZrO2 matrix, which transform martensitically to monoclinic (m) symmetry under applied stresses. The kinetics of the martensitic transformation is believed to be nucleation controlled and the nucleation is always stress induced. In situ observation of the martensitic transformation using transmission electron microscopy provides considerable information about the nucleation and growth aspects of the transformation.