15 at.% Yb3+:YAG/YAG transparent composite ceramics with a coaxial geometry were synthesized by a ceramic forming method combined with the reactive sintering at 1800 °C. Densification peculiarities, microstructure, optical properties, and laser characteristics of composite ceramic samples were studied. Powder mixtures of Yb3+:YAG and YAG stoichiometric compositions demonstrate almost the same densification enabling uniform shrinkage of composite without differential sintering. It was shown that in-line optical transmittance of 15 at.% Yb3+:YAG/YAG composite ceramics reaches 80 % at 1030 nm wavelength. The effective diffusion coefficient of Yb3+ ions in garnet structure has been determined. Efficient laser emission was generated from Yb3+:YAG/YAG composite ceramics with a slope efficiency of ηsa = 0.30.