Yttrium aluminum garnet (YAG) powders, synthesized through a partial wet chemical process, exhibit controlled morphology, high phase purity, and uniform homogeneity etc. This process involves the precipitation of aluminum ions onto Y2O3 particles. The transformation process of the Al-compound/Y2O3 precursor structure leads to the direct crystallization of pure YAG at 900 °C, passing through an intermediate stage where hexagonal YAH phase forms. A comprehensive study was conducted on the impact of preformed YAG as a reinforcing phase on the densification, mechanical, and thermo-mechanical properties of MgAl2O4-YAG composite, sintered under pressureless sintering in temperature range of 1500 °C–1600 °C. The inclusion of YAG particulate up to 5.0 wt% significantly enhances the densification, hardness, fracture toughness, flexural strength and high-temperature mechanical behavior of magnesium aluminate spinel (MAS) ceramics, however, increasing the YAG content beyond 5.0 wt% causes a reduction in these properties. The optimized addition of YAG particulate contributes to reducing the average grain size and refining the microstructure of the spinel ceramic matrix.