A new Er(III) β-diketonate complex, tris(dibenzoylmethanate)mono(2,2´-bipyridine) erbium(III) or [Er(dbm)3(bipy)], has been synthesized and its structural, thermal, photophysical and low temperature magnetic properties have been characterized. In the new complex, Er(III) ions are coordinated by six O atoms and two N atoms in a distorted square antiprismatic geometry. The Er(III) complex exhibits out-of-phase (χ_M^") ac susceptibility signals, when a static magnetic field is applied, signaling that at zero field a quantum tunneling regime occurs. The nearly semi-circular and symmetrical shape of the Cole-Cole plots sustain the existence of a single magnetic relaxation process. The solid state luminescent studies show an intense, sharp and narrow emission band in the near infrared region. The combined results demonstrate the ability of dbm and bipy to provide an environment that yields both interesting magnetic and optical properties.