(LSO) have been synthesized by a modified coprecipitation method. X-ray diffraction, electron microscope, and complex impedance were adopted to investigate the phase component, microstructures, and conductivities, respectively. The results show that the average grain sizes of the composite powders and as-sintered pellets are less than 20 nm and 200 nm, respectively. The conductivity of the composite materials composed of 94 wt% YSZ and 6 wt% LSO is 0.215 S/cm at 700 ℃. The conductivity of the composite is three times higher than that of the polycrystalline YSZ and has two orders in magnitude higher than that of the polycrystalline LSO at 700 ℃. By analyzing the impedance spectra and modulus spectra, the grain-boundary effect on the conductivity improvement is investigated and the conductive mechanisms of the composite materials are discussed.