Excellent wear resistance of alumina ceramics is a desirable quality for many products. The purpose of this work was to improve the wear resistance of 99% alumina ceramics in an Al2O3–Gd2O3–SiO2–CaO–MgO (AGSCM) system. The content of Gd2O3 varied from 0.01% to 1%. A test of wear rate was performed in a ball milling apparatus in a water environment according to the Chinese industry standard. The compositions and microstructure of this material, as well as the effect of bulk density on wear rate, were studied. The effect of Gd2O3 on phases, grain growth mode, and grain boundary cohesion was investigated. It was found that Gd2O3 could refine grain size, form compressive stress of the grain boundary, and promote the crystallization of CaAl12O19. The wear rate of this material was as low as 0.00052‰ (the Chinese industry standard wear rate is ≤0.15‰). The mechanisms for wear resistance of AGSCM ceramics were also determined.