Quantitative high resolution electron microscopy (HREM) was employed to study the crystallography of a zirconia‐alumina transformation‐toughening nanolaminate. The nanolaminate consisted of alternating layers of polycrystalline zirconia and amorphous alumina. The zirconia layer thickness was scaled to insure unity volume fraction of the metastable tetragonal phase at the growth temperature, as predicted by an end‐point thermodynamics model and verified by x‐ray diffraction. In the microscopy sample, phase identification was achieved from precise measurements of lattice spacings using digital diffractograms of individual nanocrystallites. Of the nanocrystallites analyzed, (22±6)% were monoclinic in a distinct crystallographic relationship with their tetragonal neighbors. The following plane and direction relationships were identified:m(100)//t(100) andm[001]//t[001]. The observed structure is the result of a stress‐induced transformation from the tetragonal phase. This transformation was localized to nanosized regions within the individual zirconia layers. ©1996 American Institute of Physics.