Composite materials have been in focus of scientific studies since decades. Metal-matrix composites have received extensive attention in the last years. The combination of a metastable austenitic TRIP-steel with magnesia partially stabilized zirconia is presented in this study. The stress induced martensitic phase transformation in both components leads to advantageous mechanical behavior. Raised compression strength as well as increased specific energy absorption on plastic deformation offers a range of structural and crash-absorption applications. Samples with zirconia additions are reinforced by volume increase during tetragonal-monoclinic phase transformation at compressive strains below 35%. The microstructure and phase evolution of partially stabilized zirconia as well as steel has been investigated by EBSD with purpose to correlate mechanical properties with phase evolution.