A new solid-state laser based on Yb3+-doped highly transparent nanocrystalline yttria (Y2O3) ceramics was developed. At room temperature and under a pump power of 2.63 W from a single InGaAs laser diode at ≈ 0.94 µm, a continuous-wave laser output of 0.47 W at 1.077 µm wavelength was obtained corresponding to a slope efficiency of about 32%. Some main spectroscopic properties of Yb3+:Y2O3 ceramics were also investigated.