A homogeneous and extremely fine yttrium aluminum garnet (YAG) precursor powder was synthesized from solutions with a low [urea]/[metal ions] ratio under microwave irradiation, and pure phase YAG was directly crystallized from it at 1173 K. In the presence of sulfate ions, a fibrillar precursor that takes on a dendritic skeleton was generated, and easily dispersible YAG nanopowder with a particle size of 20-30 nm was obtained at 1373 K. A transparent YAG ceramic with fine grains was sintered from this YAG nanopowder at 1973 K for 10 min in a graphite furnace. At the wavelength of 1060 nm, the in-line light transmittance of the YAG ceramic is up to 67%. The mechanism behind the influence of the microwave irradiation and sulfate ions on the characteristics of YAG is thoroughly discussed.