In this work, the effect of introducing tetragonal yttria-stabilized zirconia (TZ) particles in soft [Pb0.98Ba0.01][(Zr0.53Ti0.47)(0.98)Nb-0.02]O-3 (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 d(33) coefficient.