Zirconia can be considered to be one of the most important ceramic materials because of its large range of industrial applications (catalysis, coatings, spacecraft shielding, paint additives, oxygen sensors, fuel cells, nuclear fuel matrices, an alternative high permittivity material to replace silicon oxide as a gate dielectric in MOS devices). Many of these applications require the use of zirconia in a nanocrystalline form. It is now well established that a monoclinc to tetragonal phase transition is trigged by the grain size of zirconia. The mechanism of this phase transition in zirconia is not yet clearly understood. Several experiments point out that the thermodynamic properties of nanocrystalline solids are particle-size dependent. Size-related effects like the reduction of the melting temperature and displacement of the phase boundaries can be predicted. Zirconia can be considered a textbook example for describing these effects. In this ceramic several polymorphic transformations occur with the change of external parameters (Temperature, pressure,...). In this paper, the behaviour of the tetragonal to monoclinic martensitic phase transition within the Landau theory framework in particular will be discussed, pointing out the peculiar effects related to the small grain size of the nanoparticles. Neutron diffraction experiments will illustrate the validity of these arguments and provide some insight to the understanding of the behaviour of zirconia nanocrystals in severe environments, such as in nuclear reactors or in space applications.