This paper demonstrates that fine‐grained (2–3 μm), transparent Nd:YAG can be achieved at SiO2 doping levels as low as 0.02 wt% by the sinter plus hot isostatic pressing (HIP) approach. Fine grain size is assured by sintering to 98% density, in order to limit grain growth, followed by HIP. Unlike dry‐pressed samples, tape‐cast samples were free of large, agglomerate‐related pores after sintering, and thus high transparency (i.e., >80% transmission at 1064 nm) could be achieved by HIP at <1750°C along with lower silica levels, thereby avoiding conditions shown to cause exaggerated grain growth. Grain growth was substantially limited at lower SiO2 levels because silica is soluble in the YAG lattice up to ∼0.02–0.1 wt% at 1750°C, thus allowing sintering and grain growth to occur by solid‐state diffusional processes. In contrast, liquid phase enhanced densification and grain growth occur at ∼0.08–0.14 wt% SiO2, especially at higher temperatures, because the SiO2 solubility limit is exceeded.