A new process of internal gelation for preparing stabilized zirconia ceramic microspheres was developed. The influences of process parameters such as process temperatures, raw material concentrations, and the conditions of drying and calcining on the process and characteristics of the microspheres were investigated in this paper. With Y2O3 and/or MgO as stabilized agents, the microspheres had the characteristics of TZP or PSZ materials confirmed by XRD and SEM observations.