Three-phase Al2O3 - ZrO2 - Er2O3 composites with the ternary eutectic composition were fabricated by a conventional solid-state reaction route starting from commercial powders of alumina, erbia and monoclinic zirconia. Bulk composites with relative densities higher than 98% were obtained after calcining at 1400 ºC for 10 h in air and sintering at 1500 °C in air for 10 h. X-ray diffraction and energy-dispersive X-ray spectroscopy showed the presence of the three expected phases: alumina, EAG and zirconia. The composites exhibit a homogeneous microstructure with equiaxed grains of about 1 µm in size. Mechanical tests were carried out in compression at temperatures between 1300 – 1450 °C in air. Extended steady states of deformation were attained without macroscopic damage. The stress exponent in such experimental conditions was close to 2, suggesting that grain boundary sliding is the main deformation mechanism, as found in other fine-grained ceramics.