This paper describes the preparation, optical properties and the role of the concentration of rare earth ions (RE: Eu, Er, Tb, Yb) as active centers in the energy transfer of Y2O3: RE nanophosphors. The materials are prepared by the combustion method using urea or glycine. Nanoparticles can be prepared with sizes ranging from 5 to 100 nm and can be estimated by high resolution TEM. Optimization of Eu and Er content in these nanophosphors was reported. The effect of energy transfer between Tb and Eu and the up-conversion between Er and Yb were studied. We will survey recent advances in nanophosphor development and discuss their future application potential.