Biaxial strength testing of functionally graded Al2O3/ZrO2 discs revealed that the strength of such discs, prepared by electrophoretic deposition, was almost doubled from 288 MPa for pure Al2O3 to 513 MPa for the graded discs; this was due to the compressive surface residual thermal stresses in the Al2O3 surface layer caused by the graded compositional profile. The surface compressive stress measured by means of X-ray diffraction was compared with the analytically calculated stress distribution in the graded component.