An approach combining microstructural and optical modeling based on atomistic simulation results is proposed, in order to assess the performance of Nd:YAG laser ceramics resulting rom luminescence and transparency changes as a function of grain size and dopant concentration. It is found that while small grain sizes enhance transparency, luminescence is reduced, resulting in a trade-off to achieve optimum laser performance. These effects are linked to ceramic production by considering different sintering routes. This improved insight into the micro-structural effects of Nd:YAG ceramics on laser performance will allow a more targeted experimental optimization of this new class of laser materials.