Nd3+ doped Y2O3 nano-powders were synthesized using the thermal decomposition method with an average particle size of 10 nm, estimated by XRD and TEM measurements. The nano-powders were inserted into the silica glass matrix during the fabrication of the glasses using the sol-gel method. The obtained samples were characterized both structurally and optically. The TEM images of the Y2O3:Nd3+ nano-powders in the silica glass matrix indicated that the nano-powders were dispersed homogeneously in the glass matrix. The emission spectra of the samples with those of freestanding nano-powders showed that the sharp emission peaks became wider and the Stark levels disappeared after introducing nano-powders into the silica. The decay times of the F-4(3/2) level were found to enhance after introducing nano-powders into the silica matrix.