The investigation underline the in situ formation of ZrO/ZnFeO composites and the resultant structural, morphological, mechanical and magnetic properties. The characterization results ensured the crystallization of tetragonal ZrO (t-ZrO) and ZnFeO phases at 900 °C. Depending on Zn/Fe content, the composite system revealed a gradual increment in the phase yield of ZnFeO. The significance of monoclinic ZrO (m-ZrO) 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-ZrO transition. The crystallization of ZnFeO as a secondary phase in the t-ZrO 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 ZnFeO in composite system. All the t-ZrO/ZnFeO composites ensured strong ferrimagnetic features and moreover better biocompatibility and non-toxicity characteristics were displayed from in vitro tests.