The fluorescence spectra and laser operation of Nd:Y₂O₃ transparent ceramic fabricated by the vacuum sintering plus hot isostatic pressing method were reported. By comparing with the fluorescence spectra of Nd:YAG transparent ceramics, it is shown that the ⁴F_3/2-⁴I_11/2 transition spectra of Nd:Y₂O₃ transparent ceramic have multiple spectral lines with similar gain, which is more beneficial to realize simultaneous dual-wavelength laser oscillation. The spectra discrete characteristic among different Stark transitions of Nd:Y₂O₃ transparent ceramic was beneficial to obtain abundant wavelength lasers around 1.0-1.1 μm through the cavity mirror coating to control the loss of different wavelengths. Furthermore, a simple plane-plane cavity was used, and the output coupler with reasonable coating design was selected for different wavelength laser output. The maximum output power of 3.62 W and the conversion efficiency of 40.4% were obtained for the 1074.6 nm and 1078.8 nm dual-wavelength laser output. The output power of 1.7 W and the conversion efficiency of 19.4% were achieved for 1130.3 nm laser output.