Transparent ceramics (Gd0.975−xLuxDy0.025)3Al5O12 (x = 0.2, 0.5, 0.975) are fabricated by vacuum sintering with the transmittance of ~60% at 583 nm. The doping of Lu3+ was beneficial to stabilize the garnet phase, and the best doping concentration was 20 at.%. All three (Gd, Lu)3Al5O12:Dy ceramics display typical Dy3+ emission, originating from 4F9/2 → 6HJ (J = 15/2, 13/2, 11/2) transition. Temperature-dependent luminescence spectra from 303.15 K to 603.15 K prove that the (Gd, Lu)3Al5O12:Dy ceramics had good thermal stability and could be an ideal yellow-emitting candidate in light-emitting diodes. The luminous efficiency of the encapsulated white LED lamp was found to be ~87.9 lm/W when the injection current was 600 mA. The transparent (Gd, Lu)3Al5O12:Dy ceramics show great application potential in various optical systems especially in the fields of luminescence and display.