Mixed zirconia-hafnia (Hf0.25Zr0.75O2) powders of fine particle size and narrow particle-size distribution can be prepared via co-precipitation routes using mixed zirconium and hafnium salts as the starting materials. The characteristics of the resultant zirconia-hafnia powders are dependent strongly on the dehydration route by which the co-precipitated hydroxide gels are dried. Zirconium-hafnium hydroxide gels are formed when zirconium and hafnium oxynitrates are co-precipitated in an ammonia solution of pH 10.5. The co-precipitated hydrous gels were dried by three very different routes including organic solvent dehydration, microwave drying, and conventional infrared heating lamp drying. The dried hydroxides were then calcined at various temperatures in the temperature range 550–1150 °C, followed by ball milling to remove large soft-particle agglomerates. The resultant zirconia-hafnia powders were characterized for crystallite size, particle size, particle-size distribution, particle morphology, and the degree of powder agglomeration, using experimental techniques such as X-ray diffraction, BET surface area, differential thermal analysis, thermo-gravimetric analysis, sedigraph, scanning and transmission electron microscopy. Hard particle aggregates, which cannot be effectively eliminated using ball milling, occur in the zirconia-hafnia powders processed via either the microwave drying or conventional infrared heating lamp drying routes. In contrast, the organic solvent dehydration route resulted in an almost aggregate-free powder of fine crystallite and particle sizes. Therefore, the zirconia-hafnia powder processed via the organic solvent dehydration route exhibited high sinterability on sintering at 1300 °C.