Optical absorption and emission spectra have been measured for Nd‐doped Y3Al5O12ceramics obtained by a urea precipitation method. The optical properties of the ceramics are almost the same as those of single crystals grown by the Czochralski method and floating‐zone method, except for a higher background absorption of 2.5–3 cm−1. The energy‐level structure for Nd3+in the Y3Al5O12ceramics is determined for a 1‐at. % Nd concentration. The induced emission cross section for the 1‐at. %‐Nd‐doped ceramic is calculated to be 4.9×10−19cm2, which falls in the range reported for the Nd:Y3Al5O12single crystals. The Nd concentration dependence of the emission decay time at the 1064‐nm laser wavelength was also measured, and typical concentration quenching was observed. The decay time of the 1‐at. %‐Nd‐doped ceramic is 219 &mgr;s, which is slightly smaller than the reported values for single crystals.