This paper investigates the effect of prolonged high temperature exposure on concentric laminated Al2O3-ZrO2 composites. An ultrafine scale microstructure with a cellular 7 layer concentric lamination with unidirectional alignment was fabricated by a multi-pass extrusion method. Each laminate in the microstructure was 2-3μm thick. An alternate lamina was composed of 75%Al2O3-(25%m-ZrO2) and t-ZrO2 ceramics. The composite was sintered at 1500˚C and subjected to 1450˚C temperature for 24 hours to 72 hours. We investigated the effect of long time high temperature exposure on the generation of residual stress and grain growth and their effect on the overall stability of the composites. The residual stress development and its subsequent effect on the microstructure with the edge cracking behavior mechanism were investigated. The residual stress in the concentric laminated microstructure causes extensive micro cracks in the t-ZrO2 layer, despite the very thin laminate thickness. The material properties like Vickers hardness and fracture toughness were measured and evaluated along with the microstructure of the composites with prolonged high temperature exposure.