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Graded nano-composite Si3N4-based ceramics cutting tool material was fabricated by HP (hot pressing) sintering technique. The composite sintering additives composed of Y2O3 and La2O3 was used. The microstructure of every layer and mechanical properties of composite ceramic were studied. Distinct bimodal size distribution and the interlaced and the nested microstructure in every layer were observed. The grain number in unit area decreases with decrease of TiC content from the inner first layer to outside third layer. Mechanical properties analysis showed that the graded nano-composite ceramic material possessed the optimum mechanical properties with flexural strength of 985 MPa, fracture toughness value of 8.41 MPa.m1/2 and hardness value of 16.83 GPa. In the present work, we present a new approach to improve the mechanical properties of Si3N4-based ceramics cutting tool material by introducing the functionally graded materials concept (FGM). The graded Si3N4-based ceramics possesses more optimal residual stress distribution which can result optimum mechanical properties. This optimal residual stress distribution can meet the stress requirement in cutting process.