A low-cost and minimal-processing-step method is demonstrated to synthesize Yb2O3-ZrO2 system by laser excitation catalyzed solid-state reaction. With 980 nm CW laser irradiating, near-resonant excitation of Yb3+ ions can obviously enhance solid state reaction. As the molar content of Yb2O3 rises from 12.5% to 50%, the lattice parameter of Yb2O3-ZrO2 ceramic increases distinctly. Among them, high crystal quality of Yb2Zr2O7 and Yb0.2Zr0.8O1.9 are synthesized at the laser power of 400 W for 10 s. Two obvious Raman peaks of Yb2Zr2O7 represent increased Raman activity. X-ray photoelectron spectroscopy (XPS) and Impedance spectroscopy demonstrate the huge amount of the oxygen vacancies in Yb0.2Zr0.8O1.9. Yb2Zr2O7 shows lowest thermal conductivity among all the ceramics studied, within the range of 0.497-0.730 W mK−1 from 25 °C to 1200 °C, which indicates a promising thermal barrier material.