Pure and gadolinia-doped nanocrystalline ceria powders were prepared through the gel combustion route. Analysis of crystallite size, surface area, and particle size indicates that the powders are agglomerates of nanosize primary particles. The degree of agglomeration increases with increase in the gadolinia content. The shrinkage behavior on firing of the powders was studied using a dilatometer. Although the shrinkage starts at a lower temperature, the densification completes at a higher temperature as the gadolinia content increases. The wider temperature range required for shrinkage in high gadolinia content ceria is attributed to the wider distribution of interparticle pore size in the green compact.