Microwave hydrothermal technique has been applied to crystallize ZrO2 nanoparticles with the sizes below 10 nm and activated with Eu. Trivalent europium ions acted also as the stabilization agent of the high temperature ZrO2 polymorphs at the room temperature. To achieve this, high concentrations - up to 20 % of Eu3+ - were introduced to the zirconia host lattice. Reference samples of ZrO2 containing yttrium were synthesized to obtain pure cubic, tetragonal and monoclinic phases at constant europium concentration. Eu3+ ions have not been reduced to divalent form, however, we have observed reduction of Zr4+ ions by means of luminescence spectroscopy and electron paramagnetic resonance (EPR). The variation of Zr3+ concentration in the samples with increasing Eu3+ content seems to support the concept of trivalent ion pairs as charge compensation centers in ZrO2. Excitation of Eu3+ ions was conducted via low and high symmetry sites. Trivalent zirconium ions have been found to play a role in the excitation of Eu3+ ions at low symmetry sites.