Nanocrystalline yttria-doped ceria powder, with the composition Ce0.55Y0.45O1.775, was synthesized by a combustion technique using citric acid as the fuel and the corresponding metal nitrates as oxidants. This process involves mild conditions as the external temperature required to initiate the combustion is only approximately 250 °C. The product was characterized by x-ray diffraction (XRD) to ascertain the phase purity. The crystallite size of these calcined samples, as seen by transmission electron microscopy, was found to be in the range 6 nm to 50 nm. The surface area of the fine powder, as obtained from the Brunauer–Emmett–Teller technique, was about 140 m2/g. The agglomeration behavior as a function of temperature and the lattice thermal expansion studies were carried out using high-temperature XRD. This nanocrystalline powder resulted in nearly theoretical bulk density at a relatively lower temperature, which is attributed to the superior powder properties. The sintered microstructure, as studied by scanning electron microscopy, revealed the presence of fine grains.