Nb-doped SrTiO₃ (Sr_{1 − x}Ti_0.9Nb_0.1O₃, x = 0.01 and 0.06, henceforth known as STN) and 8 mol% Y₂O₃ stabilized ZrO₂ (8YSZ) composites were prepared by mixing them in different volume fractions between 10 vol.% and 50 vol.% of 8YSZ. The composites were compacted into pellets, sintered and evaluated for phase stability, phase compatibility, microstructure and electrical conductivity. Microstructural analysis of the STN–8YSZ composites revealed that above 30 vol.% of 8YSZ, the percolation of the STN phase was extremely limited. Phase analysis by X-ray diffraction showed no clearly detectable secondary phases. However, microstructural analysis revealed segregation and formation of Nb enriched particles in the 50 vol.% 8YSZ composite. Chemical analysis by energy dispersive spectroscopy (EDS) also showed the inter-diffusion of elements (especially Ti from STN and Zr from 8YSZ) from both phases on small length scales. The DC electrical conductivity measurements on the STN–8YSZ composites showed a drastic decrease in conductivity when more than 10 vol.% of 8YSZ was used in the composite. The initial metallic conductivity behavior changed to semiconducting type for more than 30 vol.% 8YSZ, confirming the percolation limit observed by the microstructural analysis.