Alumina/zirconia (Al2O3/ZrO2) multilayer thin films were deposited on Si (100) substrates at an optimized oxygen partial pressure of 3 Pa at room temperature by pulsed laser deposition. The Al2O3/ZrO2 multilayers of 10:10, 5:10, 5:5, and 4:4 nm with 40 bilayers were deposited alternately in order to stabilize a high-temperature phase of zirconia at room temperature. All these films were characterized by X-ray diffraction (XRD), cross-sectional transmission electron microscopy (XTEM), and atomic force microscopy. The XRD studies of all the multilayer films showed only a tetragonal structure of zirconia and amorphous alumina. The high-temperature XRD studies of a typical 5:5-nm film indicated the formation of tetragonal zirconia at room temperature and high thermal stability. It was found that the critical layer thickness of zirconia is ≤10 nm, below which tetragonal zirconia is formed at room temperature. The XTEM studies on the as-deposited (Al2O3/ZrO2) 5:10-nm multilayer film showed distinct formation of multilayers with sharp interface and consists of mainly tetragonal phase and amorphous alumina, whereas the annealed film (5:10 nm) showed the inter-diffusion of layers at the interface.