This study investigates the microstructure and mechanical properties of novel antimicrobial bioceramics composited with various fractions of Ag/yttria-stabilized zirconia (YSZ) and sintered at different temperatures. X-ray diffraction patterns of all the composites show a single crystalline phase of tetragonal YSZ regardless of Ag content. However, the grain size enlarges with increased sintering temperature. The composite sample containing 0.5 wt% Ag and sintered at 1400 °C for 1 h possesses a maximum grain size of approximately 0.3 μm. At high sintering temperature, the micro-hardness increases because of the reduction of porosity. From the MTT assay, time-dependent proliferation shows that the Ag/YSZ composite ceramic is not cytotoxic. Thus, the Ag/YSZ composite ceramic possesses good biological activity, useful for its applications in biomedicine and dentistry.