Nanocrystalline Gd2O3:Eu3+ was prepared by modified combustion synthesis using citric acid as the fuel and metal nitrates as oxidants. By using X-ray diffraction (XRD)，high resolution transmission electron microscopy (HRTEM) and fluorescence spectrophotometry, the structural, morphological and luminescent properties of the nanocrystals were investigated. The results showed that Gd2O3:Eu3+ nanocrystal with pure cubic phase was produced after the samples prepared using different citric acid-to-metal nitrate (C/M) molar ratios were calcined at 800℃ for 1 hour. The grain size was approximately 30 nm and the size distribution was narrow. The Gd2O3:Eu3+ nanocrystals whit C/M ratio 1.0 had the best crystallinity and strongest photoluminescence. The main emission peak of Gd2O3:Eu3+ nanocrystal was 612 nm, being attributed to 5D0→7F2 transition. The charge transfer state had an obvious red shift in the excitation spectrum. The efficient energy transfer from Gd3+ to Eu3+ was also observed. In addition, the influences of C/M molar ratio on crystallinity and luminescent properties were studied and discussed.