Hydrothermal treatment of starting components was applied over the range of temperature 270-300 oC and at pressure of 30 bars for the synhesis of powders for mullite-zirconia ceramics. The mechanism and hydrothermal reactions are discussed. The influence of the obtained nanosize powders on the sintering rate, phase composition and properties of mullite-zirconia ceramics was studied and compared with the properties of traditionally obtained ceramics. It is shown that the densification of ceramic samples obtained from hydrothermally and traditionally prepared powders is graetly affected by the used preparation method. Development of mullite, ZrO2 (tetragonal or monoclinic) as well as corundum - in ceramic samples from traditionally obtained powders start at 1300 oC, whereas from hydrothermally obtained (in particular mullite phase) - at 1100 oC.