Over the years, advancement in ceramic-based dental restorative materials has led to the development of monolithic zirconia with increased translucency. The monolithic zirconia fabricated from nano-sized zirconia powders is shown to be superior in physical properties and more translucent for anterior dental restorations. Most in vitro studies on monolithic zirconia have focused mainly on the effect of surface treatment or the wear of the material, while the nanotoxicity of this material is yet to be explored. Hence, this research aimed to assess the biocompatibility of yttria-stabilized nanozirconia (3-YZP) on the three-dimensional oral mucosal models (3D-OMM). The 3D-OMMs were constructed using human gingival fibroblast (HGF) and immortalized human oral keratinocyte cell line (OKF6/TERT-2), co-cultured on an acellular dermal matrix. On day 12, the tissue models were exposed to 3-YZP (test) and inCoris TZI (IC) (reference material). The growth media were collected at 24 and 48 h of exposure to materials and assessed for IL-1β released. The 3D-OMMs were fixed with 10% formalin for the histopathological assessments. The concentration of the IL-1β was not statistically different between the two materials for 24 and 48 h of exposure (p = 0.892). Histologically, stratification of epithelial cells was formed without evidence of cytotoxic damage and the epithelial thickness measured was the same for all model tissues. The excellent biocompatibility of nanozirconia, as evidenced by the multiple endpoint analyses of the 3D-OMM, may indicate the potential of its clinical application as a restorative material.