A method of manufacturing an alumina-based ceramic includes sintering a powder compact of an iron-containing alumina powder in an atmosphere (N.sub.2, 95 N.sub.2 -5 H.sub.2, H.sub.2) of a relatively low oxygen partial pressure, and annealing in an atmosphere (80 N.sub.2 -20 O.sub.2, O.sub.2) higher in oxygen partial pressure than the sintering atmosphere to provide an alumina-based ceramic with a grain-boundary migration layer on a surface thereof. The resulting undulated grain boundaries on the surface layer suppress and deflect the crack propagation, thereby improving the short-crack toughness. The formation of a grain-boundary migration layer on the surface of an alumina-based ceramic brings about a great improvement in short-crack related properties, including durability and wear resistance.