The fabrication of transparent Nd3+ ion-doped Lu2O3 ceramics is investigated by pressureless sintering under a flowing H-2 atmosphere. The starting Nd-doped Lu2O3 nanocrystalline powder is synthesized by a modified coprecipitant processing using a NH4OH+NH4HCO3 mixed solution as the precipitant. The thermal decomposition behavior of the precipitate precursor is studied by thermogravimetric analysis and differential thermal analysis. After calcination at 1000 degrees C for 2 h, monodispersed Nd3+:Lu2O3 powder is obtained with a primary particle size of about 40 nm and a specific surface area of 13.7 m(2)/g. Green compacts, free of additives, are formed from the as-synthesized powder by dry pressing followed by cold isostatic pressing. Highly transparent Nd3+:Lu2O3 ceramics are obtained after being sintered under a dry H-2 atmosphere at 1880 degrees C for 8 h. The linear optical transmittance of the polished transparent samples with a 1.4 mm thickness reaches 75.5% at the wavelength of 1080 nm. High-resolution transmission electron microscopy observations demonstrate a "clear'' grain boundary between adjacent grains. The luminescent spectra showed that the absorption coefficient of the 3 at.% Nd-doped Lu2O3 ceramic at 807 nm reached 14 cm(-1), while the emission cross section at 1079 nm was 6.5 x 10(-20) cm(2).