Ytterbium doped scandium oxide (Yb:Sc 2 O 3 ) nanopowders were synthesized by a novel co-precipitation method. A NH 4 HCO 3 +NH 4 OH (molar ratio=3:1) mixed solution was adopted as the precipitant. The characteristics of precursor and powders calcined at different temperatures were investigated. After calcination at 1100°C for 4h, highly sinterable Yb:Sc 2 O 3 nanopowders with primary particle size of about 35nm and low agglomeration were obtained. Using as prepared powders, high optical quality Yb:Sc 2 O 3 transparent ceramic with average grain size of about 10μm was fabricated by vacuum sintering at 1700°C for 20h. The in-line transmittance of the sample (1.0mm in thickness) reached 71.6% at the wavelength of 1200nm. The spectroscopic properties of the transparent ceramic were also studied.