In this study, we produced zirconia nanoparticles with a pure tetragonal phase, good dispersion, and an average particle size of approximately 7.3 nm using the modified hydrothermal method. Zirconium oxychloride (ZrOCl2-8H2O) was used as zirconium source, while propanetriol was used as an additive. The influence of propanetriol content, sonication time, hydrothermal temperature, and type of dispersant on the physical phase and dispersibility of zirconia nanoparticles was investigated. Monoclinic zirconia was found to completely transform into a tetragonal structure when the mass fraction of glycerol was increased to 5 wt%. With the increase in the mechanical stirring time under ultrasonic conditions, the size distribution range of the prepared particles became narrower and then wider, and the particle size became first smaller and then larger. Ultrasonic and mechanical stirring for 5 min had the best effect. When comparing the effects of different dispersants (PEG8000, PVP, and CTAB), it was found that the average particle size of zirconia nanoparticles prepared with 0.5 wt% PVP was the smallest. Furthermore, by adding different concentrations of pure tetragonal phase nanozirconia to 3Y-ZrO2 as reinforcement additives, the bending strength of the prepared ceramics increased first and then decreased with increasing addition amounts. When the amount of addition was 1 wt% and the ceramic was calcined at 1600 °C, the flexural strength of the ceramic increased significantly, which was about 1.6 times that of the unadded ceramic. The results are expected to provide a reference for the reinforcement of high-purity zirconia ceramics.