An all-oxide Al2O3-TiO2 ceramic multilayer composed of 10-100 nm thick alternating layers was fabricated using the reactive magnetron sputtering process. Microindentation tests were carried out on the multilayer ceramic followed by microstructural observations of the cross-sections of the indented sites to characterize the indentation response of the system. During the observations, it was noted that an extensive room temperature "deformation" occurred in the multilayer ceramic material. The material shows a thickness reduction of as much as similar to 40% under a conical indenter at 300 mN of load without microcracking and dislocation-assisted deformation. The room temperature deformation mechanism is governed by the relative movement and rearrangement of the anisotropic nanoscale columnar grains along the intergranular boundaries containing elongated voids. The relative sliding along the intergranular boundaries, and the subsequent granular rotation under indentation were well captured by finite element simulation.