Zirconia with average crystalline size of 20nm, regular spherical particle and agglomeration free was successfully fabricated by surface modification of polymer and heterogeneous azeotropic distillation process. The space obstruct of polymer limits the growth of precursor. The distilla- tion effectively dehydrates hydrous zirconia, which makes butanol molecular substituting water surround the precursor particle. The process prevents the formation of hard agglomerates be- tween zirconia moleculars. When nanoparticles zirconia added, the antifriction properties of 932 lubricating oil can be improved.