Ultrafine TbO1.81 and Tb2O3 powders were obtained from the pyrolytic precursor prepared via a wet chemical route using ammonium hydrogen carbonate (AHC) as the precipitant. The precipitation precursor has a chemical composition of hydrated terbium carbonate and exhibits one-dimensional nanorod morphology. The average width of the nanorods rises as the increase of AHC concentration. Calcining the precursor in air directly yields a round TbO1.81 nanopowder with an average particle size of ~140 nm through dehydration, decarbonation and particle growth processes. On the other hand, a Tb2O3 powder with a finer particle size of ~85 nm is reduced under flowing hydrogen atmosphere upon heating. The molar ratio of AHC to Tb3+ significantly affects the particle dispersion of final oxide products and the best molar ratio for the synthesis of well dispersed powder is 1∶1. The bandgap energies of TbO1.81 and Tb2O3 are ~1.67 eV and 5.20 eV, respectively.