In this paper, we report the fabrication of high-quality 5 at. % Er3+ ions doped SrF2 transparent ceramics, the potential candidate materials for a mid-infrared laser-gain medium by hot-pressing at 700 °C for 40 h using a chemically-derived powder. The phase structure, densification, and microstructure evolution of the Er:SrF2 ceramics were systematically investigated. In addition, the grain growth kinetic mechanism of Er:SrF2 was clarified. The results showed lattice diffusion to be the grain growth mechanism in the Er:SrF2 transparent ceramic of which highest in-line transmittance reached 92% at 2000 nm, i.e., very close to the theoretical transmittance value of SrF2 single crystal. Furthermore, the emission spectra showed that the strongest emission band was located at 2735 nm. This means that it is possible to achieve a laser output of approximately 2.7 μm in the 5 at. % Er3+ ions doped SrF2 transparent ceramics.