3 mol% yttria-doped stabilized zirconia (3YSZ) is synthesized by a solvothermal process, and its characteristics are investigated using various methods. Also, the dispersibility of synthesized 3YSZ nanoparticles is observed with the species of surface modifier. The 3YSZ nano sol prepared with an optimum condition is employed in prism coating and its properties are evaluated. The synthesized 3YSZ nanoparticles show a globular shape with about 10 to 20 nm crystallite size. The mixed phases with the nano sol show a high specific surface of 178 m2/g. The prism sheet coated with the 3YSZ nano sol present an excellent refractive index, transmittance, and luminance; refractive index is 1.603, transmittance is 90.2 %, and luminance of coating film is improved by 5.9 % compared to that of the film without 3YSZ nano sol. It is verified that the surface modified 3YSZ is suitable as the prism sheet for optical displays.