Magnesium oxide nanopowder is synthesized using magnesium nitrate hexahydrate and oxalic acid as precursors via the sol-gel method. In order to investigate the effect of magnesia nanopowders on the physical properties of sintered alumina, 0.1, 0.3, and 0.5 wt% of MgO are added to alumina. The prepared specimens were sintered at 1570°C for 4 hours under an inert atmosphere. The morphology and size of nanopowders were characterized by transmission electron microscope (TEM) and scanning electron microscope (SEM). Structural analysis was investigated by means of Fourier transform infrared spectroscopy (FT-IR) and X-ray diffraction (XRD). Outcomes show that by increasing the percentage of MgO, spinel phase (MgAl2O4) has been formed in the structure of alumina. During the sintering process, spinel phase diffused through the grain boundaries and pinned the grain boundaries which led to decrease in grain sizes. So, by decreasing the grain size, the physical properties of sintered alumina have improved.