Powder forming process is used for fabrication of bulk ceramic components. Optimization of powder forming process parameters in the fabrication of alumina-zirconia composite used in orthopedic implants is done for desired physical property. In this research work,process parameters such as composition of zirconia, compaction pressure and sintering temperature were analyzed using Response Surface Method (RSM). The physical properties such as density, porosity and water absorption characteristics of the proposed composite were studied. To study the influence of the different process parameters over the physical properties of the fabricated composites materials, experimental runs were framed by using Box behnken method. Three factors and two levels were selected with a total of 17 runs and their consecutive tests were carried out. The validity of the model was checked and the significant parameters were identified using Analysis of variance (ANOVA). The results indicate that the sintering temperature is influencing predominantly the physical properties of composites compared to other process parameters. © (2014) Trans Tech Publications, Switzerland.