Nanocolloids of compounds containing fluorescent rare earth ions have recently attracted significant attention as agents for biolabeling, bioimaging, bio- and chemical sensing, and other applications. Erbium oxide nanocolloids have been prepared for the first time in water and gammabutyrolactone. Optical dynamic scatterometry and atomic force microscopy determined an average size (average mean height) of erbium oxide nanoparticles to be 10-11 nm. Prominent optical absorption peaks of the nanocolloids at 442.5 nm, 450.0 nm, 487.2 nm (strong), 492.0 nm, 523.0 nm (strong), 541.6 nm, 548.6 nm, 652.6 nm, and 665.7 nm (strong) can be attributed to erbium ions hosted within nanoparticles. Laser fluorescence spectroscopy of the nanocolloids was conducted using excitations with the lines of argon-ion laser (514 nm, 488 nm, 476 nm, and 458 nm) and 980-nm semiconductor laser. Strong green emission at 571 nm is more likely from transition between 4S3/2 and 4I15/2 levels and relatively weak red emissions from transition between 4I9/2 and 4I15/2 level of erbium was observed at excitation with visible laser radiation 488 nm and 476 nm. The reported nanocolloids thus showed to be good candidates for fluorescent biosensing applications and also as a new lasing filling medium in fiber lasers.© (2009) COPYRIGHT SPIE--The International Society for Optical Engineering. Downloading of the abstract is permitted for personal use only.