To develop transparent materials with superior mechanical properties, nanocrystalline magnesium aluminate (MgAl2O4) spinel with grain sizes ranging from 3.7 to 80 nm has been synthesized by environmentally controlled pressure assisted sintering. In this study, we investigated the microstructure and grain size dependence of the mechanical properties of nanocrystalline MgAl2O4 by performing transmission electron microscopy, nanoindentation, uniaxial micropillar compression, and micro-cantilever bending. Electron microscopy confirmed that the environmentally controlled pressure assisted sintering technique produces a nearly fully dense grain structure with a porosity of less than 1% in larger grain-sized ceramics and observably pore-free grain structures in the smaller grain-sized ceramics. Mechanical characterization revealed that nanoindentation hardness, compressive fracture strength, and fracture toughness each exhibit distinct grain size dependence. Our experimental results and numerical analyses point to a change in dominant strain accommodating mechanisms from dislocation-based plasticity to shear banding as the grain size is reduced, as previously suggested by the literature. Practical implications of the change in strain accommodation mechanisms manifest as the emergence of indentation size effect, weak grain size dependence of hardness and strength, and a ∼2-fold increase in apparent fracture toughness for the smaller grain-sized ceramics.