Nanosized ZrO2 particles are applied in high-performance thermal barrier coatings and catalyst carriers. To synthesize nanosized zirconia, precipitation from aqueous solutions followed by hydrothermal treatment is widely conducted. In this work, a modified hydrothermal treatment route is described for high-yield fabrication of well-dispersible nanosized t–ZrO2. Zirconium oxychloride and sodium hydroxide were used as the precursor and precipitant, respectively. N, N-bis(2-hydroxyethyl) glycine (bicine) was used as surface stabilizer to inhibit the early agglomeration of nuclei, and ultrasonication was used to enhance the dispersion of ZrO2 nanocrystals. The hydrothermal treatment was optimized for reaction temperature, time, fill fraction, and solid content. The synthesized zirconia was characterized using X-ray diffraction, dynamic light scattering, field emission scanning electron microscopy (FESEM), and transmission electron microscopy (TEM). The yield of zirconia increased to 134 g/L after hydrothermal. Tetragonal ZrO2 obtained with hydrothermal treatment at 200 °C for 8 h at a fill fraction of 80% has a good dispersibility, with an average particle size of 20 nm and a narrow size distribution.