Lanthanide (Ln3+) doped Gd2O3nanoparticles (NPs) have been prepared via a thermal treatment of gadolinium carbonate precursor, which was obtained by simple hydrothermal treatment of Gd(NO3)3 solution in the presence of urea and glycerol. The size of the nanoparticles could be fine tuned from 270 to 10 nm by varying the amount of glycerol, which acted as a chelating agent to control the size of the nanoparticles. Calcination of the gadolinium carbonatenanoparticles at 500 °C led to the formation of uniform Gd2O3nanoparticles without any obvious morphology change. By doping the lanthanide ions (Yb, Er/Tm) into the Gd2O3host matrix, these nanoparticles emitted strong upconversion (UC) fluorescence under 980 nm near infrared (NIR) excitation. Moreover, their emission colors could be tuned by simply changing either the co-dopant concentration or the dopant species. Water dispersibility was achieved by forming a silica layer on the surface of the Gd2O3nanoparticles. The possibility of using these silica-coated upconversion nanoparticles for optical imaging in vitro/in vivo has been demonstrated. It was also shown that these Gd2O3nanoparticles brightened the T1-weighted images and enhanced r1 relaxivity of waterprotons, which suggested they act as T1 contrast agents for magnetic resonance (MR) imaging. Thus, Gd2O3nanoparticles doped with Ln3+ ions provide the dual modality of optical and magnetic resonance imaging.