Rare earth complexes have gained attention in recent years for their remarkable luminescence properties, especially their long lifetimes, clear emission bands, and significant luminous quantum efficiency. In the ultraviolet area, the lanthanide ions exhibit relatively tiny absorption. The current investigation systematically portrays the tailoring of the micro-structural, opto-electonic and defect related features of the sol-gel derived pristine and rare earth element-samarium (Sm3+) substituted tin oxide (SnO2) i.e., Sn1-xSmxO2 (x = 0.0, 0.1, 0.2 & 0.3) nanoparticles (NPs). The structural, optical, electronic, morphological, photo-induced luminescence and defects related characteristics of the NPs were explored as a function of samarium (Sm3+) substitution level. In-depth analysis of the structure-property correlation of the Sn1-xSmxO2 NPs is the goal of this study, focusing especially on the properties related to vacancy evolution and luminescence. The elemental mapping results revealed through energy dispersive X-ray spectroscopic (EDS) technique confirmed that the Sm-substitution is distributed uniformly throughout the NPs. The X-ray powder diffraction (XRD), high resolution transmission electron microscopy (HRTEM) and field emission scanning electron microscopy (FESEM) studies corroborate that the Sm3+ substitution in the SnO2 matrix causes the decrease in crystallite size of the NPs and increase in the dislocation density. A monotonic increase in lattice strain has been observed using the Williamson – Hall (W – H) approach, which is in line with the NPs' increased dislocation density and decreased crystallite size with the Sm3+ substitution level. The presence of vacancy-type defects inside the NPs was demonstrated by positron annihilation lifetime (PAL) spectroscopic measurements, and a decrease in defects was noticed as the level of Sm3+ substitution increased. To explore the optical characteristics and the evolution of the energy band gap with Sm3+ substitution level, the optical absorption (OA) spectroscopic measurement was carried out. As the Sm-substitution level rises, the optical energy band gap of the substituted SnO2 NPs widens relative to that of pure SnO2 NPs. The existence of various absorbance bands corresponding to the atomic vibrations within the NPs were investigated by the Fourier-transform infrared (FT-IR) spectroscopic technique. The photo-induced fluorescence (FL) emission spectroscopic analysis evidenced that the defect density decreased as the Sm-substitution level increased, which is in accordance with the PAL spectroscopic studies. The FL spectra showed the two typical near band edge (NBE) and deep level emission (DLE) peaks of the NPs. The proportion of different defects and vacancies associated with the FL emission transitions are portrayed as Pie-chart diagrams. The tailored NPs can establish to be effective candidates for possible spintronic and optoelectronic applications including magneto-optical devices.