Y2O3:Eu nanopowders were synthesized by urea combustion method containing different concentration of Eu. The synthesized Y2O3:Eu nanopowders were characterized by X-ray diffractometry, scanning electron microscopy (SEM), transmission electron microscopy (TEM), high resolution transmission electron microscopy (HRTEM), selected area electron diffraction (SAED), energy dispersive X-ray analysis (EDX) and photoluminescence spectroscopy (PL). The particle size was calculated to be in the range of 15–30 nm using Scherrer's formula. The Ia-3 structure of synthesized Y2O3:Eu nanopowders were confirmed with X-ray diffractometry. The crystallinity of Y2O3:Eu nanopowders were confirmed by SAED and TEM images. The 5D0–∑7FJ (J = 0, 1, 2, 3) and 5D1–7F1 transitions bands were observed at 575–650 and 530–550 ranges in the photoluminescence spectrum. The concentration quenching was estimated to be about 5 mol% of Eu. The best chromaticity to the standard red color was observed with the sample containing 3 mol% of Eu.