Nanopowders of ZrO2 doped with Si andMg were prepared by process controlled sol–gel method. The effects of doping and heating rate (1, 4, 7, 10 ◦C/min and calcination temperature of 800 ◦C) on phase formation and optical properties of zirconia nanopowders were studied by X-ray diffraction (XRD), transmission electron microscopy, and UV–Vis absorption spectroscopy. XRD results showed that different heating rates have a great effect on the tetragonal and cubic phase formation, crystallinity, and particle size of doped ZrO2. Depending on the heating rate, band gap energy of Si4+ and Mg+2 doped ZrO2 crystals decreased. The minimum band gap was estimated to be ∼3–3.2 eV from UV–Vis spectra.