The high-pressure phase stability of the metastable tetragonal zirconia is still under debate. The transition dynamics of shocked Y2O3 (3 mol%) stabilized tetragonal zirconia ceramics under laser-shock compression has been directly studied using nanosecond time-resolved X-ray diffraction. The martensitic phase transformation to the monoclinic phase, which is the stable phase for pure zirconia at ambient pressure and room temperature, has been observed during compression at 5 GPa within 20 ns without any intermediates. This monoclinic phase reverts back to the tetragonal phase during pressure release. The results imply that the stabilization effect due to addition of Y2O3 is negated by the shear stress under compression.