A new, simple and inexpensive method for the preparation of nanosized (Y1-xErx)2O3 oxides, including the stages of synthesis and thermolysis of Y1-xErx(HCOO)3 precursors, has been developed. The precursors were obtained by the interaction of mixtures of yttrium and erbium nitrates with formic acid. The effect of erbium concentration on the structure, morphology, and optical properties of (Y1-xErx)2O3 oxides was studied using X-ray diffraction, scanning electron microscopy, and optical absorption methods. Under UV excitation (Y1-xErx)2O3 oxides with 0.005≤x ≤ 0.25 exhibit strong green luminescence related to the 2H11/2/4S3/2 → 4I15/2 transitions and weak red luminescence associated with the 4F9/2 → 4I15/2 transition. According to the CIE chromaticity coordinates, the oxides demonstrate a yellowish-green color emission. A noticeable decrease in the luminescence intensity was recorded for oxides with erbium concentrations above 2.5 mol.% (x = 0.025). Yellowish-green and yellow green upconversion emission resulting from the 4S3/2 → 4I15/2 and the 4F9/2 → 4I15/2 transitions of Er3+ ions were observed upon continuous 980 nm diode laser excitation. When the concentration of erbium in (Y1-xErx)2O3 oxides increases, the luminescence color changes and the intensity of upconversion emission rises. The maximum intensity of upconversion emission was observed for the (Y0.9Er0.1)2O3 oxide. A two-photon upconversion mechanism was established based on the pumping power dependence of UC luminescence intensity. The thermoluminescence characteristics of (Y0.9Er0.1)2O3 oxides based on the ratio of the intensities of the lines corresponding to thermal-coupled 2H11/2 and 4S3/2 levels were determined, the absolute and relative sensitivity values was calculated, and the prospects for using this oxide in non-contact optical thermometers were estimated.