In our study, the effect of MgO doping on the densification and grain growth in gadolinium zirconate (Gd2Zr2O7) during microwave sintering was reported, and the nanocrystalline Gd2Zr2O7 and Mg-doped Gd2Zr2O7 raw powders used for shaping and sintering were synthesized by a novel co-precipitation assisted solvothermal method. The results indicate that the increase in density is always accompanied by grain size growth with different degrees at different sintering temperatures (1200 °C, 1250 °C, and 1300 °C). The relative density increased rapidly along with the prompt grain growth at 1300 °C. However, when sintered at 1200 °C and 1250 °C, the grain size increased slowly, while the density increased remarkably with the further addition of MgO. Gd2Zr2O7 ceramics with high density (95%) and relatively small grain size (106 nm) were fabricated at a MgO-doping amount of 2 at % and sintering temperature at 1250 °C. MgO was proved as an effective sintering additive for Gd2Zr2O7 which can significantly promote the densification process and also can furtherly reduce the densification temperature.