Dy3+ doped Gd2O3 nanoparticles were prepared by glycine-nitrate combustion route and their luminescence properties have been investigated. Through host lattice absorption at 230 nm, emission peaks at 488 (4F9/2 → 6H15/2, blue-green) and 572 nm (4F9/2 → 6H13/2, yellow) of Dy3+ are observed along with a broad emission peak at 400 nm (host). Luminescence intensity increases with increase of heat-treatment from 500°C to 900°C due to extent of reduction of particle surface defect. On increasing the concentration from 1 to 2 at.% Dy3+, luminescence intensity increases slightly and decreases with further increase of Dy3+ due to cross-relaxation among Dy3+ ions. This was supported by lifetime studies. Lifetimes for 4F9/2 level of Dy3+ in 1, 2 and 5 at.% Dy3+ doped Gd2O3 prepared at 900°C were found to be 237, 39 and 26 μs, respectively.