Zirconia ceramics have found broad applications in a variety of energy and biomedical applications because of their unusual combination of strength, fracture toughness, ionic conductivity, and low thermal conductivity. These attractive characteristics are largely associated with the stabilization of the tetragonal and cubic phases through alloying with aliovalent ions. The large concentration of vacancies introduced to charge compensate of the aliovalent alloying is responsible for both the exceptionally high ionic conductivity and the unusually low, and temperature independent, thermal conductivity. The high fracture toughness exhibited by many of zirconia ceramics is attributed to the constraint of the tetragonal-to-monoclinic phase transformation and its release during crack propagation. In other zirconia ceramics containing the tetragonal phase, the high fracture toughness is associated with ferroelastic domain switching. However, many of these attractive features of zirconia, especially fracture toughness and strength, are compromised after prolonged exposure to water vapor at intermediate temperatures (∼30°–300°C) in a process referred to as low-temperature degradation (LTD), and initially identified over two decades ago. This is particularly so for zirconia in biomedical applications, such as hip implants and dental restorations. Less well substantiated is the possibility that the same process can also occur in zirconia used in other applications, for instance, zirconia thermal barrier coatings after long exposure at high temperature. Based on experience with the failure of zirconia femoral heads, as well as studies of LTD, it is shown that many of the problems of LTD can be mitigated by the appropriate choice of alloying and/or process control.