Transparent polycrystalline YAG with nearly the same optical characteristics as those of a single crystal were fabricated by a solid-state reaction method using high-purity powders (>99.99 wt% purity). The average grain size and relative density of the 1.1 at.% Nd:YAG ceramics obtained were about 50 μm and 99.98%, respectively. An oscillation experiment was performed on a cw laser by the diode laser excitation system using the fabricated ceramics. The experimental results indicated an oscillation threshold and a slope efficiency of 309 mW and 28%, respectively. These values were equivalent or superior to those of the 0.9 at.% Nd:YAG single crystal fabricated by the Czochralski method.