In this paper, the Gd3+ codoped bifunctional coreshell nanoparticles, Fe3O4@(Y1-xGdx)2O3:Eu3+, were synthesized through a Urea Homogeneous Preci-pitation method. The microstructure, luminescence, and magnetic properties of the codoped samples were investigated and discussed with the help of various analytic techniques including X-ray diffraction, scanning electron microscope, photo-luminescence spectra, cathodelumincence mapping and vibrating sample magnetometer. The co-doped sample (x = 0.3), emitting at 612 nm dominantly under the 254 nm excitation, exhibited the photoluminescence intensity 2.7 times higher than the undoped one (x = 0), due to the efficient energy transfer between Gd3+ and Eu3+. The Fe3O4@(Y1-xGdx)2O3:Eu3+ core–shell nanoparticles were spherical and uniform, and had a particle size of about 180 nm in diameter. They also showed a saturation magnetization of 1.09 emu/g, a coercivity of 20 Oe and a remanence of 0.01emu/g. The enhanced photoluminescence and good magnetic properties of the title core–shell nanocomposites allow them to be used in biomedical applications.