Transparent 1.0 at% Nd:Lu2.7Gd0.3Al5O12 (Nd:LuGdAG) ceramics were fabricated by the solid-state reactive sintering method using commercial powders as starting materials. The powders were mixed in ethanol with tetraethoxysilane (TEOS) and MgO, dried and pressed. The compacts were vacuum-sintered from 1725 °C to 1800 °C for observing the microstructure and the optical transmittance of Nd:Lu2.7Gd0.3Al5O12 ceramics. The sample sintered at 1800 °C for 10 h has an almost dense and homogenous structure with the average grain size of 12.8 μm, whose in-line transmittance is about 70% at 1064 nm. The absorption and emission cross sections were calculated to be 1.0 × 10−20 cm2 and 1.23 × 10−18 cm2, respectively. It is proved that Nd:LuGdAG ceramics have the potential to be a new solid-state laser material.