Zirconium oxide is an inert matrix candidate for the transmutation of plutonium in light water reactor (LWR). The thermal conductivity of cubic zirconia is however lower than the conductivities of UO2 and MOX. Special designs are therefore necessary to avoid high peaking temperatures close to the melting point in the zirconia pellet. Cermet would be a favorable design to improve the thermal conductivity. The suggested cermet fuel consists of fine plutonium doped stabilized zirconia particles dispersed in a metallic inert matrix. Manufacturing tests on cubic zirconia microspheres were carried out by using the internal gelation process developed at the Paul Scherrer Institute. Gelation was conducted successfully and the sintered spheres had a homogeneous single cubic structure. The lattice parameter of the cubic zirconia was estimated as a function of the Er, Y and Ce atomic fraction using a simplified semi-quantitative formula. On the experimental side, it is necessary to further investigate the ideal fabrication conditions, because some gel spheres were opaque and fragile and most of the sintered spheres were cracked, nicked and porous.