Persistent luminescent CaAl2O4:Eu2+,Nd3+ powders were prepared by a non-aqueous sol-gel technique. The crystallization of calcium aluminate by heat-treatment of the sols is described in detail. After heat treatment in air, the europium dopant ions are mainly in a trivalent state. For the reduction to the divalent state post-annealing in a reducing nitrogen-hydrogen atmosphere is used. The reduction of europium ions is monitored by photoluminescence and x-ray absorption (XANES) spectroscopy. The degree of reduction is strongly dependent on the annealing temperature. Although for high temperature a strong enhancement of the Eu2+ emission is observed, this also leads to powders with a gray body color.