Transparent polycrystalline yttrium aluminum garnet (YAG) ceramics have garnered an increased level of interest for high-power laser applications due to their ability to be manufactured in large sizes and to be doped in relatively substantial concentrations. However, surface characteristics have a direct effect on the lasing ability of these materials, and a lack of a fundamental understanding of the polishing mechanisms of these ceramics remains a challenge to their utilization. The aim of this paper is to study the polishing characteristics of YAG ceramics using magnetic field-assisted finishing (MAF). MAF is a useful process for studying the polishing characteristics of a material due to the extensive variability of, and fine control over, the polishing parameters. An experimental setup was developed for YAG ceramic workpieces, and using this equipment with diamond abrasives, the surfaces were polished to subnanometer scales. When polishing these subnanometer surfaces with 0–0.1 μm mean diameter diamond abrasive, the severity of the initial surface defects governed whether improvements to the surface would occur at these locations. Polishing subnanometer surfaces with colloidal silica abrasive caused a worsening of defects, resulting in increasing roughness. Colloidal silica causes uneven material removal between grains and an increase in material removal at grain boundaries causing the grain structure of the YAG ceramic workpiece to become pronounced. This effect also occurred with either abrasive when polishing with iron particles, used in MAF to press abrasives against a workpiece surface, that are smaller than the grain size of the YAG ceramic.