In this paper, a new method to prepare nanometer zirconia is described, and the mechanism is discussed briefly. It is proposed that the coordinated water of zirconium oxychloride acts as a microzone actuating medium in the preparation of zirconia powder. The method was realized by agitating a solid mixture of sodium hydroxide and zirconium oxychloride, whose intermediate and final products were studied by X-ray fluorescence analysis (XRF), X-ray photoelectron spectroscopy (XPS), X-ray diffraction (XRD), and transmission electron microscopy (TEM). It was found that the nuclei of zirconia were formed under the superalkaline condition and polycrystallized at 400 degreesC. The experiments showed that the powder obtained was tetragonal/cubic zirconia, with narrow particle size distribution (average size about 7 nm), and contained and less than a trace (<10 ppm) of chlorion. The by-product of the new process can be recycled as chemical raw material after simple treatment. Compared with traditional methods, the new method is environmently benign, with low energy consumption, convenient manipulation, easy source recycling, and low pollution.