Gadolinium oxide host and europium/dysprosium/terbium doped gadolinium oxide nanoparticles were synthesized using the sonochemical technique. Gadolinium oxide nanocrystals were also co-doped with total 2 mol% of Eu(3+)/Dy(3+),Eu(3+)/Tb(3+),Dy(3+)/Tb(3+), and also Eu(3+)/Dy(3+)/Tb(3+) ions, by the same method. The nanoparticles obtained were characterized using powder x-ray diffraction (XRD), transmission electron microscopy (TEM), and selected area electron diffraction (SAED) techniques. The size of the particles ranged from 15 to 30 nm. The triple doped samples showed multicolor emission on single wavelength excitation. The photoluminescence results were correlated with the lifetime data to get an insight into the luminescence and energy transfer processes taking place in the system. On excitation at 247 nm, the novel nanocrystalline Gd(2)O(3):RE (RE = Dy, Tb) phosphor resulted in having very impressive CIE chromaticity coordinates of x = 0.315 and y = 0.316, and a correlated color temperature of 6508 K, which is very close to standard daylight.