A facile aqueous sol-gel route involving precipitation-peptization mechanism followed by electrostatic stabilization is used for synthesizing nanocrystalline composite containing lanthanum phosphate and yttria. Lanthanum phosphate (80 wt%)-yttria (20 wt%) nano composite (LaPO4-20%Y2O3), has an average particle size of similar to 70 nm after heat treatment of precursor at 600 degrees C. TG-DTA analysis reveals that stable phase of the composite is formed on heating the precursor at 600 degrees C. The TEM images of the composite show rod shape morphology of LaPO4 in which yttria is acquiring near spherical shape. Phase identification of the composite as well as the phase stability up to 1300 degrees C was carried out using X-ray diffraction technique. With the phases being stable at higher temperatures, the composite synthesized should be a potential material for high temperature applications like thermal barrier coatings and metal melting applications. (C) 2012 Elsevier Ltd. All rights reserved.