Highly transparent Yb2Hf2O7 (YbHO) transparent ceramics hold promise as radiation shielding windows and luminescent host materials, and vacuum sintering is an effective way to fabricate highly dense YbHO ceramics. However, some F+ and F defect centers and some Yb2+ ions will be generated during vacuum sintering of YbHO transparent ceramics, resulting in low transparency. In response to this problem, air annealing treatment at different temperatures was adopted to eliminate defect centers of vacuum sintered YbHO ceramics and oxidize Yb2+ to Yb3+ in this work. YbHO ceramic with high in-line transmittance of 76 % at 750 nm was obtained via air annealing at 1300 °C for 4 h, which is extremely close to its limit of 79 %. Additionally, a unique optical absorption phenomenon was observed after annealing in the YbHO ceramic. The synergy effect of YbHf2++Ov+YbHf3+ in these ceramics generated from air-annealing process were proposed for the relevant reaction mechanisms involving serious optical absorption. This work is expected to provide guidance for the development of high-performance Yb-doped transparent ceramics for gamma-shielding windows and host materials.