A sol-gel combustion method has been used to synthesize Y 2 O 3 -50 vol%MgO composite nanopowders. Solutions of the precursor nitrates were mixed with citric acid and ethylene glycol, heated from 200°C to a predetermined temperature gradually, giving nanocrystalline ceramic powders. The influence of the ratio of yttrium nitrate to the whole precursor mixture and the holding temperature on the properties of the composite nanopowder was investigated using a combination of thermal analysis, X-ray diffraction, specific surface area analysis, and scanning electron microscopy techniques. When the ratio of yttrium nitrate to the whole precursor mixture reaches 22.5 mol%, the average particle size of synthesized composite nanopowder is 13 nm and the specific surface area is 45.9 m 2 / g. Then the synthesized Y 2 O 3 -MgO composite nanopowder was consolidated by the hot-pressing technique at 1200°C with different dwell time. As a result, the nanocomposite ceramic prepared with a dwell time of 60 min got the highest transmittance of 75% at 5 lm wavelength. The cut-off wavelength of Y 2 O 3 -MgO nanocomposite ceramic reaches 9.8 lm, which is superior to other mid-IR transparent materials. In addition, the fabricated sample is more or less transparent in visible wavelengths and the transmittance at 0.8 lm is as high as 14.5%.