Ferroelectric lead zirconate titanate(PZT)thin films have attracted great attention because of their potential applications in memory devices due to their unique properties, for example, hysteresis loop and high dielectric constant. To realize these memory devices, it is necessary to overcome the reliability problems such as fatigue, retention and imprint. It is well known that lead base perovskite family ferroelectric thin films with donor dopant such as La3+ and Nb5+ have improved the electrical properties of PZT thin films effectively [2-3]. And it is proposed that the cation substitution could reduce the number of defects such as oxygen vacancies, which could promote electrical fatigue and leakage current of PZT ferroelectric thin films obviously. In the present study, rare earth Yb-doped lead zirconium titanate (PYZT) nanocrystalline powders with a composition near the morphotropic phase boundary (Zr/Ti=52/48) were prepared by a modified sol-gel method. DTA/TG and XRD were used to determine the thermal and phase changes in the formation of PYZT crystalline powders. The effect of Yb3+ cation substitution for Pb2+ cation on the microstructure of PZT was developed with XRD. The grain size of PYZT nanopowders is about 40 nm determined by TEM.