Ceramic-based nanocomposites were reviewed, emphasizing the newly developed concept of material design for ceramics. First, characteristics of the nanocomposites observed by previous researchers were summarized as, significant or moderate improvement in strength, drastic change of the fracture mode from intergranular fracture of monolithic ceramics to transgranular fracture of nanocomposites, moderate enhancement of fracture toughness, improvement of other mechanical properties, and observations of dislocations. Second, several mechanisms proposed previously to explain these characteristics were reviewed. Third, our strengthening and toughening mechanisms of nanocomposites on the basis of dislocation activities were explained. In nanocomposites, the highly localized residual stresses in the matrix grains are generated by the mismatch of thermal expansion coefficients between the matrix and the dispersed particles, and the dislocations are yielded during the cooling process after sintering. These dislocations then release the tensile residual stresses intrinsically existing in the matrix grains of sintered ceramics and improve the strength of the materials. In addition, as these dislocations cannot move at room temperature the sessile dislocations in the matrix operate as nano-crack nuclei in a frontal process zone (FPZ) ahead of the crack tip when the tip of a propagating crack approaches this area. Therefore, the size of the FPZ is expanded and as a result the fracture toughness is improved. Finally, estimation of the critical FPZ size was explained in order to clarify its toughening mechanism in nanocomposites. q