Precipitation of Cs2InBr5·H2O from HBr(aq) solutions containing Pb2+ ions results in powders that exhibit narrowband green photoluminescence (λmax = 521 nm, fwhm = 89.9 meV). Synchrotron powder X-ray diffraction reveals trace amounts of Cs4PbBr6 and CsPbBr3 that cannot be detected by laboratory powder diffraction measurements. Broadening of the CsPbBr3 diffraction peaks suggests crystals that are tens of nanometers in size. Evidence for the presence of CsPbBr3 can also be seen in diffuse reflectance spectra. Cathodoluminescence imaging shows that luminescence originates from small nanometer-sized regions. Taken together, these observations point to CsPbBr3 nanocrystal inclusions as the source of photoluminescence. Heating these samples to temperatures at or above 80 °C triggers a reversible dehydration process that leads to an irreversible change in the photoluminescence from green to blue (λmax ≈ 480 nm, fwhm = 278 meV), accompanied by significant changes in the microstructure. Cathodoluminescence imaging indicates that the blue emission occurs over much larger micron-sized regions of the sample. The position of blue PL is similar to other hybrid lead bromide compounds where the emission has been assigned to 3P1 → 1S0 transitions on [PbBr4]2– ions. Based on the emission wavelength and cathodoluminescence imaging, the blue emission is assigned to isolated [PbBr4]2– ions that substitute for [InBr5·H2O]2– ions in the parent hydrate phase. This work provides new insight on the spontaneous formation of halide perovskite nanocrystals in an inert matrix, one that does not rely on the use of organic solvents and is stable in ambient atmospheres.