The lanthanide compound nanoparticles were prepared by the hydrothermal method. They were characterized by x-ray diffractometer, scanning electron microscopy, ultraviolet-visible spectrophotometry and photoluminescence. The x-ray diffractometer patterns of all samples indicated crystallization of pure ceria fluorite cubic phase. The optical properties of cerium oxide nanoparticles have changed with the increase of erbium ion in initial reactants. Two peaks at 739 and 780 nm are observed in photoluminescence spectra at 200 nm excitation in the range of 400–800 nm. The lanthanide compound nanoparticles with strongest luminescence were identified in the samples.