Remarkable improvements in the lifetime of the Nd upper level and in the effective stimulated emission cross-section of Nd/Cr:YAG ceramics have been theoretically and experimentally studied. Until recently, it had been thought that the long energy transition time from Cr ions to Nd ions of Nd/Cr:YAG adversely affects laser action, degrading optical–optical conversion efficiency under CW and flash lamp pumping. However, current research showed that high-efficiency energy transition has a positive effect on laser action. The effective lifetime is increased from 0.23 to 1.1 ms and the emission cross-section is effectively increased to three times for that of the conventional Nd:YAG. A small signal gain is significantly improved, and the saturation power density is reduced to 1/10 that of the Nd:YAG for the same pumping power density. A CW laser light generated in a laser diode (LD)-pumped 1064 nm Nd:YAG laser oscillator was amplified, and the measured output power was saturated. The output laser power calculated using theoretical saturation power density was consistent with the experimental results.