While polycrystalline ceramic of Ce+3 doped lutetium oxyorthosilicate (LSO) has demonstrated scintillation characteristics equivalent to those of single crystal material, it lacks in optical quality. It is projected that if their grain size could be reduced to the nanometer range they would be smaller than the wavelength of light thereby minimizing scattering and substantially improving optical quality. In this investigation ceramic LSO:Ce that is much more transparent than would be expected from a highly anisotropic material, has been successfully produced by hot pressing at 75 MPa in a graphite die and furnace. The conditions necessary for powder processing and densification were optimized so as to produce dense LSO:Ce ceramic discs with an average grain size of 700 nm. Appreciable improvement in optical properties was observed, with decay and emission levels comparable with LSO single crystals, the light output was some 20% below that of single crystal. The degradation of light output in the nanoceramic is attributed to the formation of quenching centers associated with the loss of oxygen during densification, to which such nanomaterials are highly susceptible.