ZrO2 / Ni Functionally Graded Materials (FGMs) were fabricated by newly developed underwater - shock compaction technique. The experimental assembly consists of three parts vis, an explosive container, a water tank and a powder container. The energy of shock wave increases by the convergence of shock wave due to the reduction of the cross section area of water tank. The increased shock pressure and longer duration of the pressure pulses facilitate the compaction of difficult - to - compact powders to near theoretical density. The pressure obtained was estimated to be 4 GPa. The 6 - to 11 - layered FGMs were fabricated. The 11 - layered FGMs were subjected to cyclic differential thermal loading test and were found to withstand the thermal stress successfully.