A graded material of the (Al2O3 WC/Co)/TiC/Ni was prepared by using the self-propagating high-temperature synthesis-aided hot isostatic pressing process. The WC/Co particles were added to the outer Al2O3 layer in order to activate the heterophase toughening effects and control the thermal expansion mismatch between the outer and inner layers. SEM and TEM observations show a clustering structure of the WC/Co cermet in the Al2O3 matrix. The residual stress introduced by the compositionally graded structures was analysed using FEM calculation and X-ray diffraction. Measurements of the indentation toughness and R-curve behaviour indicated that the compressive surface stresses and WC/Co particles can significantly strengthen and toughen the Al2O3 ceramics. The indentation toughness of the (Al2O3 WC/Co)/TiC/Ni at the surface was 13.1 MPam(1/2), while those of the (Al2O3 WC/Co) uniform composite and the monolithic Al2O3 were 7.3 and 4.0 MPam(1/2), respectively. It was found by SEM observation of the crack propagation induced by indentation, that the crack deflection, bridging, blunting and arresting occurred at the WC/Co clusters.