Aqueous mixtures of Zr(C2H3O2)4 and Gd(NO3)3 were used to prepare chemically homogeneous ZrO2-Gd2O3 solid solutions containing 0 to 9 mol% Gd2O3. The application of kinetically limited equilibria concepts explains why a metastable tetragonal phase crystallized subsequent to precursor pyrolysis from compositions containing < 6.5 mol% Gd2O3 and a metastable cubic phase crystallized from precursors with > 6.5 mol% Gd2O3. Partitioning experiments for a composition containing 3 mol% Gd2O3 showed that the maximum equilibrium solid-solubility of Gd2O3 in tetragonal ZrO2 is 1.0 +/- 0.1 mol% and the minimum equilibrium solid-solubility in cubic ZrO2 is 8.0 +/- 0.2 mol% at 1400-degrees-C. Although phase partitioning appeared to initiate during heating, complete partitioning at 1400-degrees-C required approximately 200 h. Large compositional variations (less-than-or-equal-to +/- 1 mol% Gd2O3) were observed within tetragonal grains and from grain to grain during the first 50 h at 1400-degrees-C, whereas the composition of cubic grains produced during partitioning were relatively invariant. Experiments showed that this compositional variability was not present in material rapidly heated to 800-degrees-C, but was a result of partitioning. At 1400-degrees-C, growth of the tetragonal grains was very sluggish; it increased only to 3-mu-m after 500 h, whereas the number of larger cubic grains increased during this same period. The implications of these observations are related to the processing of rare-earth-stabilized ZrO2 transformation-toughened materials.