Contrary to predictions of the ZrO2-Al2O3 phase diagram powders of solid solutions of alumina in zirconia with up to 40mol% Al2O3 are described in the recent literature. Up to now the interpretations of the microstructure of these materials are still inconsistent. Therefore we reinvestigated nanopowders prepared by laser evaporation starting from a mixture of 55 mol% ZrO2 and 45 mol% Al2O3 by analytical high resolution transmission electron microscopy (TEM) and Al-27 magic angle spinning nuclear magnetic resonance (MAS NMR). The results reveal that in case of this preparation route a heterogeneous powder system is formed consisting dominantly of nanocrystallites of zirconia with an incorporation of, obviously, only a very small amount of alumina, and that the crystallites are surrounded by an amorphous layer of predominantly alumina. No indication was found that Al3+ ions occupy seven- or eight-fold co-ordinated sites of Zr4+ ions. A simple kinetic model for the formation of the nanoparticles' microstructure is given.