We present the results of a plane wave based density functional study of the structure and properties of tetragonal zirconia in the range of pressures from 0 to 50 GPa. We predict a transition to a fluorite-type cubic structure at 37 GPa which is likely to be of a soft mode origin and is accompanied by a power law decrease of the frequency of the Raman-active A(1g) mode. A detailed study of the pressure effect on phonon modes is given, including theoretical Raman spectra and their pressure dependence. Our results provide a consistent picture of the pressure-induced phase transition in tetragonal zirconia.