By manipulating the work function, the dissipation of thermal energy on the material surface can be regulated through Electron Transpiration Cooling (ETC) mechanism. The doping of rare-earth oxide serves as an effective approach for reducing the work function, whereas there is still a lack of comprehensive research into the microstructural morphology of the rare-earth oxides and their correlations with the modifications of the work functions. This study investigates the detailed microscopical structure of Gd2O3 in the ultrahigh-temperature ceramic system (ZrB2-20 vol%SiC). Semi-quantitative composition analyses based on X-ray photoelectron spectra indicate that an increased doping concentration of Gd2O3 is beneficial for the formation of a single solid-state Gd0.18Zr0.82O1.91 phase of ZrB2-SiC system. Atomic-scale scanning transmission electron microscopy (STEM) analyses suggest that Gd2O3 is enriched at the interfaces between SiC and ZrB2 matrix with a nanoscale fibrous morphology composed of alternated Gd2O3 crystals and pores, rendering a continuous microstructure throughout the entire system. This peculiar microstructural morphology is anticipated to facilitate its diffusion along the grain boundary and the formation of Gd2O3 nanolayers at the surface region below the melting points of the ceramic matrix, which can efficiently lower the material work function and reduce the emission energy of the surface electrons during thermal emission through ETC mechanism. The composite with 10 vol% Gd2O3 induces a reduction of the averaged work function of ∼0.49 eV before preforming the thermionic emission experiments. Our results provide valuable insights into the impacts of rare-earth oxide on the ZrB2-SiC matrix, as well as shed light on the feasibility of the ETC mechanism through the efficient design of thermal protection materials.