Nanocrystals of Y2O3:Yb3+–Er3+ (2:1 mol% Yb3+:Er3+) were prepared by a novel precipitation technique using Na2S and Pluronic-F127 (PF127) surfactant. Crystal structure, particle size, red emission intensity and fluorescence decay lifetimes were determined using microscopy and spectroscopy techniques. TEM analysis indicates that the average particle size ranged from 40 to 70 nm. The nanocrystals showed a strong red emission band centered at 663 nm after excitation at 970 nm. The upconverted signal intensity was improved 250% with an optimum concentration of Na2S (0.48 M) and PF127 (0.1 mM). The improvement was explained in terms of the reduction of surface contaminants as well as the cubic crystalline phase of the parent Y2O3 material. Interestingly, the formation of sulfates () is faster than that of O–H, which is responsible for quenching the red and green emissions. The results suggest that Na2S and PF127 are good candidates for surface passivation, especially when used in conjunction. The preparation of Y2O3:Yb3+–Er3+ using Na2S with strong red emission band was produced at a lower cost than that of other sulfuration processes.