Rare earth (e.g., Eu, Er, Yb, Tm) doped Y<inf>2</inf>O<inf>3</inf> nanocrystals are promising fluorescent bioimaging agents which can overcome well known problems of currently used organic dyes like photobleaching, phototoxicity, and light scattering. Furthermore, the alternative quantum dots (QDs) composed of heavy metals (e.g., CdSe) possess inherently low biocompatibility due to the heavy metal content. In the present work, monodisperse spherical Y<inf>2</inf>O<inf>3</inf>:Eu3+ nanocrystals were successfully synthesized by microwave assisted urea precipitation method followed by thermochemical treatment. This is a green, fast and reproducible synthesis method, which is surfactant and hazardous precursors free. The as prepared particles were non-aggregated, spherical particles with a narrow size distribution. The calcined particles have a polycrystalline structure preserving the monodispersity and the spherical morphology of the as prepared particles. After calcination of Y(OH)CO<inf>3</inf>:Eu3+ precursors at 900°C for 2 hours, a highly crystalline cubic Y<inf>2</inf>O<inf>3</inf> structure was obtained. The Y<inf>2</inf>O<inf>3</inf>:Eu3+ spherical particles showed a strong red emission peak at 613nm due to the 5D<inf>0</inf>-7F<inf>2</inf> forced electric dipole transition of Eu3+ ions under UV excitation (235 nm) as revealed by the photoluminescence analysis (PL). The effect of reaction time on size and photoluminescence properties of calcined particles and also the effect of reaction temperature and pressure on the size and the yield of the precipitation process have been studied. The intense red fluorescent emission, excellent stability and potential low toxicity make these QDs promising for applications in bio-related areas such as fluorescence cell imaging or fluorescence bio labels.