With the aim of preparing high performance oxide-dispersion-strengthened tungsten based alloys by powder metallurgy, the W-Y2O3 composite nanopowder precursor was fabricated by an improved wet chemical method with anion surfactant sodium dodecyl sulfate (SDS) addition. It is found that the employment of SDS can dramatically decrease W grain size (about 40 nm) and improve the size uniformity. What’s more, SDS addition can also remarkably improve the uniform dispersion of Y2O3 particles during the synthesis process. For the alloy whose powder precursor was fabricated by traditional wet chemical method without SDS addition, only a few Y2O3 dispersoids with size of approximate 10–50 nm distribute unevenly within tungsten grains. Nevertheless, for the sintered alloy whose powder precursor was produced by improved wet chemical method, the Y2O3 dispersoids (about 2–10 nm in size) with near spherical shape are dispersed well within tungsten grains. Additionally, compared with the former, the alloy possesses smaller grain size (approximate 700 nm) and higher relative density (99.00%). And a Vickers microhardness value up to 600 Hv was also obtained for this alloy. Based on these results, the employment of SDS in traditional wet chemical method is a feasible way to fabricate high performance yttria-dispersion-strengthened tungsten based alloys.