In an attempt to optimize the upconversion luminescence (UCL) output of a Nd3+-sensitized near-infrared (808 nm) upconverting core-shell (CS) nanocrystal through deliberate incorporation of lattice defects, a comprehensive analysis of microstrain both at the CS interface and within the core layer was performed using integral breadth calculation of high-energy synchrotron X-ray (λ = 0.568551 Å) diffraction. An atomic level interpretation of such microstrain was performed using pair distribution function analysis of the high-energy total scattering. The core NC developed compressive microstrain, which gradually transformed into tensile microstrain with the growth of the epitaxial shell. Such a reversal was rationalized in terms of a consistent negative lattice mismatch. Upon introduction of lattice defects into the CS systems upon incorporation of Li+, the corresponding UCL intensity was maximized at some specific Li+ incorporation, where the tensile microstrain of CS, compressive microstrain of the core, and atomic level disorders exhibited their respective extreme values irrespective of the activator ions.