Yb ³⁺ doped YAG transparent ceramics have great potential as gain medium for high-power solid-state lasers due to many advantages, such as broad absorption and emission bands, high gain, low thermal loading, long fluorescence lifetime and high quantum efficiency. So Yb:YAG transparent ceramics have gradually been paid more attention. In this work, we aimed at optimizing the properties of powders to fabricate highly transparent Yb:YAG ceramics. 5at%Yb:YAG nano-powders were synthesized via the co-precipitation method by using ammonium hydrogen carbonate as the precipitant, and pure water or alcohol-water mixture as the solvent. All powders calcined at 1250 ℃ for 4 h exhibit a pure YAG phase. Compared to the one with pure water solvent, the 5at%Yb:YAG powder synthesized with alcohol-water solvent exhibits smaller average crystallite size and lower agglomeration degree. 5at%Yb:YAG transparent ceramics were successfully fabricated by vacuum sintering without sintering additives from the obtained powder with alcohol-water solvent. The microstructure and in-line transmittance of the ceramics sintered at 1500-1825 ℃ for 20 h and 1800 ℃ for 10-50 h were investigated. All ceramic samples show a homogeneous microstructure except for that sintered at 1825 ℃ for 20 h. The sample sintered at 1800 ℃ for 50 h shows the highest in-line transmittance of 78.6% at 1100 nm and 76.7% at 400 nm (2.2 mm thickness). The calculated absorption and emission cross sections are 5.03×10^-21 cm² at 937 nm and 13.48×10^-21 cm² at 1031 nm, respectively. Therefore, Yb:YAG ceramics with high optical transparency and uniform microstructure have been fabricated from powder with alcohol-water solvent.