Nanocrystals of oxides containing europium as the main constituent or as a doping element in RE2O3 ( RE=Y, Gd) have been prepared by direct oxide precipitation in high-boiling polyalcohol solutions and characterized by high-resolution TEM, absorption spectroscopy, and luminescence spectroscopy. The samples obtained consisted of concentrated and colloidally stable suspensions of luminescent oxide nanoparticles with an average grain diameter in the range 2-5 nm. The nanoparticles were found to be highly crystalline despite their ultrasmall size and the low temperature of 180 degrees C applied during the synthesis. Upon UV excitation, the red luminescence relative to the 5D0-->7Fn transition within the cubic form of RE2O3 exhibits some important differences from that usually found in bulk materials.