Rare-earth ions doped sesquioxide ceramics exhibit notable advantages, including high thermal conductivity, low phonon energy, and high laser damage threshold, thereby demonstrating significant potential for solid-state laser applications. Powders with high purity and low agglomeration were synthesized by chemical co-precipitation method, then 5% (atomic fraction) Yb∶Lu₂O₃ transparent ceramics with high density and high transparency were obtained through oxygen pre-sintering and hot isostatic pressing (HIP) sintering. The samples have an average grain size of less than 1 μm, and exhibit an in-line transmittance of above 81% at 1 100 nm. The absorption cross-section at 974 nm is ~0.97×10^-20 cm², and the emission cross-section at 1.08 μm is ~0.39×10^-20 cm². Using a 976 nm laser diode as the pump source, a continuous-wave (CW) laser output at 1 080.1 nm is achieved from the fabricated Yb∶Lu₂O₃ ceramics at room temperature, with a output power of 11.67 W and slope efficiency of 55.3%.