MgO is drawing considerable attention owing mainly due to its tissue equivalency (Zeff = 10.8) and excellent luminescence response. In this work, we report the synthesis and investigation of a highly sensitive MgO: Li, Sm phosphor in nanocrystalline form for TL dosimetry application. The structural and morphological study has been done using X-ray diffraction (XRD) and Transmission Electron Microscopy (TEM). TL intensity of gamma irradiated MgO nanophosphor increases with doping of Li and further improves by co-doping with Sm. The MgO: Li, Sm nanophosphor exhibit TL glow curve structure having isolated single peak at 169 °C and linearity in the low dose (13 mGy-5 Gy) as well as high dose range (10–1000 Gy). The TL structure and peak position remains stable at all doses. The phosphor shows excellent stability (low fading rate) and repeatability. TL intensity of MgO: Li, Sm is 12 times higher than that of commercially available LiF: Mg, Ti (TLD 100) and almost equivalent to LiF: Mg, Cu, P (TLD-700 H). This may be attributed to the formation of greater number of density of traps and suitable trapping levels with optimum dopant selection in MgO nanophosphor. The incorporation of the Sm3+ has improved the TL intensity manifold with appearance of desired isolated single peak. The photoluminescence (PL) spectra confirm the Sm3+ emission at 566, 603, 651 and 708 nm with an excitation wavelength of 315 nm. Further the role of dopants has been discussed on the basis of charge transfer mechanism and corelated with associated kinetic parameters for better understanding of TL process. The newly explored MgO: Li, Sm nanophosphor has shown attractive TL dosimetry properties owing to its high sensitivity, stable glow curve structure, dose linearity, low fading and repeatability which meet all the requirement to establish this as a next generation TL phosphor for medical and personal dosimetry application.