Abstract Hydrothermal digestion of freshly precipitated cerium–zirconium hydroxides was used to synthesize nanocrystalline ceria–zirconia. This simple method produced ceria–zirconia with higher surface area and thermal stability than the untreated oxide. After calcination at 1000 °C, the surface area of the hydrothermally synthesized samples was ∼11–12 m 2/g while the untreated Ce 0.5Zr 0.5O 2 had only 4.2 m 2/g. The continuous dissolution and reprecipitation of hydroxides during hydrothermal treatment is postulated to a more defect-free structure which is able to withstand loss of surface area when exposed to high temperatures. In addition, these nanocrystalline oxides were more reducible than the untreated oxide. While the addition of silica to ceria–zirconia further increased the surface area and oxygen storage capacity, the oxides suffered severe loss of surface area after calcination to 1000 °C. A silica-rich overlayer was formed which decreased the oxygen storage capacity as compared to silica-free ceria–zirconia. The oxygen storage capacity shows a strong dependence on the surface area for values below 50 m 2/g but diffusion of oxygen from the bulk becomes limiting for high surface area ceria–zirconia.