Ultrafine Tb2O3 nanopowders were prepared by spray co-precipitation method combined with reduction atmosphere treatment. The influence of ammonium bicarbonate precipitant concentration on precursor phase, nanopowders microstructure, and sintering performance was investigated. The results show that the concentration of the precipitant significantly affects the microstructure, uniformity and sintering activity of the nanopowder. A low concentration of precipitant can lead to excessive growth of precipitate grains, resulting in an increase in nanopowders size and unevenness, while a excessive concentration of precipitant can cause poor soft agglomeration. The optimal precipitant concentration is 1.5 mol/L, and under this condition, ultrafine Tb2O3 nanopowders with an average particle size of about 52.45 nm can be obtained, with a particle size distribution range of 30 nm to 80 nm. The Tb2O3 transparent ceramic prepared by sintering the powder in a protective atmosphere at 1 400 ℃ and hot isostatic pressing has a linear transmittance of 76.11% at 1 064 nm.