Several optical applications demand for enhanced optical response of rare earth containing glasses. In the present investigation, modification in spectral features with the dispersion of gold nanoparticles in Dy3+ doped bismuth borosilicate glasses is reported. All the glass samples were prepared using conventional melt-quench technique. Prepared glasses were characterised using Fourier transform infrared spectroscopy (FTIR), dilatometery, field emission scanning electron microscopy (FESEM), Uv–Vis–NIR spectroscopy and photoluminescence. Thermal studies carried out using dilatometer confirms the decrease in glass transition after co-doping of gold nanoparticles and Dy3+. Field emission scanning electron microscopy revealed the existence of gold nanoparticles inside the glassy matrix. A marginal change in the values of Judd-Ofelt parameters of glasses is observed after the incorporation of gold nanoparticles. Significant enhancement in emission intensities is observed after the addition of gold nano-particles. The high stimulated emission cross-section (σemi) and radiative transition probability values for prepared glasses confirms their suitability for the fabrication of yellow light laser.