A carbonate coprecipitation method was used for the facile synthesis of highly reactive 10 mol%-Y2O3-doped CeO2 (20YDC) nanopowders, employing nitrates as the starting salts and ammonium hydrogen carbonate (AHC) as the precipitant. The AHC/RE3+ (RE = Ce + Y) molar ratio (R) and the reaction temperature (T) significantly affect the final yield and precursor properties, including chemical composition and particle morphology. Suitable processing conditions are T = 60 °C and R = 2.5 to 10, under which precipitation is complete, and the resultant precursors show ultrafine particle size, spherical particle shape, and good dispersion. The thus-processed precursors are basic carbonates with an approximate formula of Ce0.8Y0.2(OH)CO3 · 2H2O, which directly yield oxide solid solutions upon thermal decomposition at a very low temperature of approximately 400 °C. The 20YDC solid-solution powders calcined at 700 °C show excellent reactivity and were densified to >99% of theoretical via pressureless sintering at a very low temperature of 950 °C for 6 h.