A cost-effective solid-state reactive sintering (SSRS) method has recently been developed to synthesize high quality, fully dense, and large-grained yttrium-doped barium zirconate (BZY) ceramic pellets from the raw materials of BaCO3, ZrO2, Y2O3, and NiO, resulting in total proton conductivities as high as 3.3 × 10−2 S·cm−1at 600 °C under a wet argon atmosphere [J. Tong et al., Solid State Ionics, 2010, 181, 496]. In the present work, the mechanisms for the rapid formation of the cubic perovskite phase of BZY, pellet densification, and grain growth during SSRS synthesis are investigated in detail using a suite of experimental techniques. The pre-reaction addition of NiO to the precursor powders is confirmed to accelerate the formation of the cubic perovksite BZYphase. The rapid and full densification of NiO-modified pellets at relatively low temperature (1350 °C) is ascribed to the formation of the impure phase BaY2NiO5 and its subsequent role as a sintering aid. The dramatic further grain growth after densification is facilitated by the partial decomposition of the BaY2NiO5 (which is located primarily at grain boundaries) and its incorporation into the cubic perovskite structure of BZY.