In this work, the effect of introducing tetragonal yttria-stabilized zirconia (TZ) particles in soft [Pb0.98Ba0.01][(Zr0.53Ti0.47)0.98Nb0.02]O3 (PZT) was investigated. Both microstructure and electrical properties of the PZT–xTZ (x = 0, 2, 5, 10, 20 vol%) composites were studied and correlated. The addition of zirconia hinders the matrix grain growth, resulting in smaller grains. According to X-ray diffraction analysis, zirconia containing composites have a higher rhombohedral-to-tetragonal phase ratio, in addition to lower dielectric and piezoelectric properties, in comparison to pure PZT. Electrical properties, in terms of strain– and polarization–electric field hysteresis curves, are presented and correlated with the observed phase compositions and microstructures. The extrinsic contribution to the piezoelectric properties in PZT and PZT–xTZ was studied by measuring the frequency and the stress field amplitude dependences of the piezoelectric d33 coefficient.