Tb3+ and Eu3+ co-doped Y2O3 nanoparticles with a volume-weighted average size of about 30 nm were synthesized via simple Pechini-type sol–gel process. The growth of monocrystalline nanoparticles is investigated via XRD and TEM analysis. The study of energy transfer between Tb3+ and Eu3+ ions was carried out by means of PL, PLE, and photoluminescence decay analyses. The energy transfer from Tb3+ to Eu3+ is efficient and we show how a resonant type via a dipole–dipole interaction is the most probable mechanism. We compared the energy-transfer efficiencies calculated from the intensities and from the lifetimes of \({}^5\hbox{D}_4 \longrightarrow ^7\hbox{F}_5\) transition of Tb, showing the presence of two populations of Tb, with different local surroundings, in the matrix. Furthermore, the critical distance between Tb3+ and Eu3+ ions has been calculated by means of different theories, from a new probabilistic approach based on the discretization of the theory of Chandrasekhar about the distribution of the nearest neighbors in a random distribution of particles, and from the PL data, suggesting a value of about 7 A.