A study of alumina (AI203 ) and magnesium aluminate spinel (MgAb04) was undertaken with the aim of investigating the changes in properties and microstructural characteristics upon doping with specific rare earth elements. Microscopic imaging and analysis of RE doped polycrystalline oxide ceramics has shown convincing evidence for monolayer segregation of RE cations to grain boundaries. State of the art aberration corrected scanning transmission electron microscopy (SuperSTEM I Daresbury Laboratories) has shown monolayer segregation to grain boundaries, and atomic resolution parallel electron energy loss spectroscopy has confirmed the presence of the RE cation at the grain boundary position. The region affected by segregation has been shown to extend no further than one monolayer from the centre of the grain boundary with RE cations occupying matrix cation boundary sites. The effect of RE dopants on the powder processing and sintering of high purity commercial grade precursor powders was investigated. Differences were found between doped alumina and spinel in the sintering whereby the alumina grain growth was restricted by grain boundary mobility such that the grain size was reduced for a given sintering temperature. The grain size of spinel was unaffected by sintering temperature. Differences in the fracture behaviour between doped alumina and spinel was found. The alumina samples manifested a change from trans-granular fracture to inter-granular fracture due to the addition of RE dopants. Spinel did not show such an effect. Alumina was shown to posess an approximate Hall-Petch relationship between hardness and grain size for both doped and undoped samples, such that sub-micron grain size samples posessed high hardness. Optical characterisation has shown the potential for the use of fine grained RE doped alumina and spinel samples for hard window applications. A reduction in the grain size of alumina to below 1 μm leads to a change in the scattering mechanism, thus reducing low angle scatter and birefringence due to the refractive index mismatch. The benefits to optical properties are in addition to the benefits in mechanical properties of a submicron grain structure.