The investigation underline the in situ formation of ZrO2/ZnFe2O4 composites and the resultant structural, morphological, mechanical and magnetic properties. The characterization results ensured the crystallization of tetragonal ZrO2 (t-ZrO2) and ZnFe2O4 phases at 900 °C. Depending on Zn2+/Fe3+ content, the composite system revealed a gradual increment in the phase yield of ZnFe2O4. The significance of monoclinic ZrO2 (m-ZrO2) is also evident in all the systems at 900 °C; however, the incremental heat treatment to 1300 °C indicated its corresponding loss, thus indicating the reverse m- → t-ZrO2 transition. The crystallization of ZnFe2O4 as a secondary phase in the t-ZrO2 matrix is also affirmed from the morphological analysis. Mechanical studies accomplished good uniformity in all the investigated compositions despite the variation in the phase content of ZnFe2O4 in composite system. All the t-ZrO2/ZnFe2O4 composites ensured strong ferrimagnetic features and moreover better biocompatibility and non-toxicity characteristics were displayed from in vitro tests.