Constellation formation flying of nanosatellites (< 10 kg) is becoming a trend for future space exploration missions. Liquid chemical micropropulsion that can provide high thrusting force for high ΔV orbital transfer is a crucial hardware component for successful constellation re-positioning. However, liquid chemical micropropulsion system dedicated for these nanosatellites still not currently available in the market. In this study, a microthruster was fabricated using alumina toughened zirconia (ATZ) as structural material and yttria-stabilised zirconia-graphene (YSZ-Gr) as electrode material. The device has a dimension of 1.7 cm (length) × 1.3 cm (width) × 0.5 cm (thickness) and weighing only 6.18 grams, comprising of five major components such as propellant reservoir, injector, electrodes, micronozzle and reaction chamber. Material characterization shows that both materials have negligible weight loss and small reduction in material hardness and fracture toughness after 20 thermal-vacuum cycles. Moreover, results from dynamic mechanical analysis (DMA) ascertain that addition of graphene significantly enhanced the damping behaviour of the zirconia composite. Electrolytic decomposition of hydroxylammonium nitrate (HAN) solution in the reaction chamber has been demonstrated with maximum thrust of 180.53 mN at a propellant flow rate of 60 µl/s. The preliminary results suggest that the HAN-based ceramic microthruster could potentially be used as primary propulsion for nanosatellites in constellation formation flying.