The effect of the yttria powder additions on the synthesized nano-alumina particles from Al scrap was investigated. The Al scrap was dissolved in an aqua regia solution at the room temperature and then was precipitated at a pH of 9–10. After calcination of the formed gel, 0–20 wt% yttria particles were added and mixed. The dried slurries were compacted and sintered at a temperature range of 1550–1650 °C. The phase composition, microstructure, densification, and mechanical properties of the sintered specimens were evaluated. Near fully dense alumina specimens at a temperature of 1550 °C as well as the sintered in-situ YAG-alumina composites at 1650 °C were successfully produced. The high hardness for all specimens was recorded at a sintering temperature of 1650 °C and attributed to the formation of YAG and grain growth of alumina. Furthermore, the addition of yttria and sintering temperature showed a significant effect on the sintered specimens microstructure, densification process, and phase composition.