Erbium-doped transparent Sc(2)O(3) ceramics with an average grain size of 0.3 mu m were synthesized from solution-derived nanoparticles using a two-step sintering process followed by hot isostatic pressing (HIP). The two-step sintered ceramics showed a remarkable decrease in grain size with relative density over 98% before HIP. After HIP, the Sc(2)O(3) ceramics became highly transparent, with negligible grain growth, and exhibited an optical transmittance of about 80%, nominally the Fresnel limit, for wavelengths greater than about 1.0 mu m.