The nanostructure and photoluminescence of polycrystalline Er-doped Y2O3 thin films, deposited by radical-enhanced atomic layer deposition (ALD), were investigated in this study. The controlled distribution of erbium separated by layers of Y2O3, with erbium concentrations varied from 6to14at.%, was confirmed by elemental electron energy loss spectroscopy (EELS) mapping of Er M4 and M5. This unique feature is characteristic of the alternating radical-enhanced ALD of Y2O3 and Er2O3. The results are also consistent with the extended x-ray absorption fine structure (EXAFS) modeling of the Er distribution in the Y2O3 thin films, where the EXAFS data were best fitted to a layer-like structure. X-ray diffraction (XRD) and selected-area electron diffraction (SAED) patterns revealed a preferential film growth in the [111] direction, showing a lattice contraction with increasing Er doping concentration, likely due to Er3+ of a smaller ionic radius replacing the slightly larger Y3+. Room-temperature photoluminescence characteristic of the Er3+ intra-4f transition at 1.54μm was observed for the 500Å, 8at.% Er-doped Y2O3 thin film, showing various well-resolved Stark features due to different spectroscopic transitions from the I13∕24→I15∕24 energy manifold. The result indicates the proper substitution of Y3+ by Er3+ in the Y2O3 lattice, consistent with the EXAFS and XRD analyses. Thus, by using radical-enhanced ALD, a high concentration of optically active Er3+ ions can be incorporated in Y2O3 with controlled distribution at a low temperature, 350°C, making it possible to observe room-temperature photoluminescence for fairly thin films (∼500–900Å) without a high temperature annealing.