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The paper reports the investigation of corrosion resistance and microhardness of Ni - Y2O3-92ZrO2 (YSZ) composites, manufactured by powder metallurgy technique and vacuum annealing at 1250 °C. The structure of the composites was investigated via SEM, XRD, and EDX analysis. Oxidation behavior was studied by thermal treatment in air ambiance. It was shown that the microstructure of nickel based composites predetermines mechanical and oxidation behavior of materials obtained. It was shown that a small YSZ addition of 2-5 wt.% enhances the oxidation resistance of nickel composites in 2-3 times, while the Vickers hardness (HV) remains practically unchanged. The addition of 10 to 20 wt.% of YSZ to nickel matrix leads to almost 8 times increase in the composite hardness. [ABSTRACT FROM AUTHOR]