This study investigates the electrical and mechanical properties of a Lu2O3–Y2O3–ZrO2 system (ZrO2 co-doped with Lu2O3 and Y2O3) and evaluates its possibility for use as a high-performance oxygen-ion conducting ceramic suitable for intermediate/high-temperature solid electrolytes. The use of electrochemical impedance spectroscopy (EIS) in the analysis and fitting of AC impedance spectra arcs on 8 mol% (Lu2O3–Y2O3)– ZrO2 has allowed to compare with the Y2O3-doped ZrO2 (YSZ) and Sc2O3-doped ZrO2 (ScSZ). (ZrO2)0.92(Y2O3)0.07(Lu2O3)0.01, with 1 mol% Lu2O3 co-doped with Y2O3, shows a bulk conductivity of 9.60 × 10−1 S/cm at 1000 °C and 3.47 × 10−2 S/cm at 800 °C, which are least several times higher than the corresponding values of any other sample in the experimental group, including Sc2O3-doped ZrO2, over the entire measured temperature range. (ZrO2)0.92(Y2O3)0.075(Lu2O3)0.005 also shows an outstanding conductivity; over two times higher than that of ScSZ. Thus, Lu2O3 co-doping can enhance mechanical properties such as flexural strength (19.5 % (1 mol% Lu2O3) and 21.5 % (2 mol% Lu2O3) higher than that of YSZ), as confirmed by the flexural strength and Vickers hardness tests. After 8 mol% sesquioxide doping of YSZ, the maximum improvement in the electrical and mechanical properties occurs at approximately 1 mol% (for electrical properties) and 2 mol% (for mechanical properties) Lu2O3 co-doping, respectively. The results of this work suggest that a small amount of Lu doping, performed during the development of materials for use in electrochemical devices (including high-efficiency energy conversion apparatus), could be a considerable approach to overcome the limitations of conventional solid oxide electrolytes.