A method of manufacturing a ceramic insulated wire involves preparing an extrudable gel compound formed by dissolving a metal-organic compound in a solvent and adding at least one thermoplastic polymer or its monomer to the mixture to make the gel compound extrudable. The so prepared extrudable gel compound is then extruded around the outer periphery of a conductor for coating the conductor with a gel coating. Thereafter a heat treatment is performed for sintering the gel compound to form a ceramic coating.