The cracks in Al2O3–ZrO2 eutectic ceramics produced by laser powder bed fusion (LPBF) have a significant impact on their practical applications in various industries. In order to understand the factors influencing crack formation, a systematic study of the characterization and propagation of cracks in single‐track, multi‐track, and bulk samples by varying the process parameters has been carried out in this research. The results showed that parallel cracks can be healed by reducing the scanning spacing and scanning length. Additionally, it was found that using a modest scanning speed and a shorter length can minimize the accumulation of thermal stress, resulting in the suppress crack formation. Based on this conclusion, a crack‐free Al2O3–ZrO2 eutectic ceramic sample was finally obtained under the optimized parameters with the power of 100 W, the scanning speed of 100 mm/s, the hatch spacing of 100 μm, the scanning length of 3 mm, and the layer thickness of 50 μm. Additionally, three typical microstructures, including eutectic, cellular, and dendritic structures, were identified in the LPBF‐fabricated Al2O3–ZrO2 samples. The cellular microstructure showed improved crack inhibition capability due to the deflection and pinning effects. Cracks expand more easily in dendritic and eutectic microstructures, where anisotropy is more prominent.