Energy transfer upconversion induced thermal effects are mainly responsible for the low efficiency of laser diode pumped Er:YAG lasers. The current work adopts Er:YAG rods with 0.25% Er(3+) doping concentration, instead of the commonly used rods with 0.5% Er(3+) doping concentration. Results show that the thermal effect is greatly alleviated. A continuous-wave output of 10.2 W is obtained using 31 W incident pump power. Optical-optical efficiency is approximately 33%. Slope efficiency, with respect to the absorbed pump power, is as high as 83%, which is close to the quantum efficiency. In a Q-switched operation, 7 mJ pulses with a pulse width of ~65 ns are obtained at 100 Hz PRF.