CeO2–Nd2O3 microspheres were successfully prepared by internal gelation process using M(OH)m and [MCit∙xH2O] (M = Ce3+, Ce4+, and Nd3+, Cit is (C6O7H5)3−) as precursors. The effects of Nd(NO3)3 content on the stability of precursor solution and on the microstructure of the sintered microspheres were investigated. The gelled microspheres and sintered composite microspheres were characterized by Fourier transform-infrared (FT-IR) spectroscopy, scanning electron microscopy (SEM), and X-ray fluorescence (XRF) spectroscopy. The distribution of Nd3+ in the microspheres was also investigated by line scanning of SEM. The results indicated that the citrate salt in the gelled microspheres was [MCit∙xH2O] (M = Ce3+ and Nd3+). Compared with composite microspheres prepared with M(OH)m (M = Ce4+ and Nd3+) as a precursor, the mass fraction of Nd2O3 in composite microspheres prepared with [MCit∙xH2O] as a precursor highly coincided with the theoretical value. There was no concentration gradient in the microspheres and the distribution of Nd3+ was homogeneous. Phase composition of the composite microspheres was Ce0.75−xNd0.25+xO1.85 and CeO2.