Nd:Gd2O3-HfO2 powder has been prepared with a co-precipitation method. The size of Nd:Gd2O3-HfO2 powder is near 50nm. Transparent Nd:Gd2O3-HfO2 ceramics were successfully fabricated by sintering the powder compact at 1800°C under H2 atmosphere. The synthesis process and optical properties were investigated in detail. By measuring the optical properties of transparent Nd:Gd2O3-HfO2 ceramics, we found that the absorption bond of Nd ions near 808nm is enlarged, and the FWHM of the emission bond near 1060nm is near 25nm. It was believed that Nd:Gd2O3-HfO2 transparent ceramic is potential laser material for the usage in solid-state heat-capacity laser(SSHCL) application.