In this study we have synthesized Y2O3 (yttria) nanopowders with 1 % Nd3+ concentration by using a thermal decomposition method and investigated the effect of annealing temperature on the particle sizes and the effect of particle sizes on the spectroscopic properties of these systems. The particle sizes were effectively controlled by synthesis and annealing temperatures; the sizes were found to vary in the 15-290 nm range. The particle sizes and cubic phase of the yttria were determined by using XRD patterns and confirmed by SEM and TEM measurements. We note that the particle sizes increase by increasing the synthesis and annealing temperatures. Temperature dependence of the width and position of a selected spectral line were successfully fitted with the theoretical expressions. We studied thoroughly the behavior of the samples under pulsed excitation and give plausible explanations of the measured effects.