Li+ (0, 1, 3, 7 and 10 at%) co-doped YPO4:7Sm(3+) were prepared by co-precipitation method using Ethylene Glycol as a capping agent as well as reaction medium. The structure, morphology, composition and photoluminescence of the samples were characterized by X-ray diffraction (XRD), IR technique, Scanning electron microscopy (SEM) and photoluminescence (PL) spectra. The XRD patterns indicated hexagonal phase for as prepared samples except for Li+ (10 at%) co-doped YPO4:7Sm(3+) nanoparticles due to concentration quenching effect. After annealing at 900 degrees C, hexagonal phase changes to tetragonal phase due to thermal quenching effect. The SEM image showed spherical nanoparticles which are non-agglomerated and highly dispersible in water. IR study reveals the influence of confined water present in the pores of hexagonal structure. The luminescence study of the as prepared nanoparticles and annealed samples at 500 degrees C and 900 degrees C respectively led to the confirmation that YPO4:7Sm(3+) shows a strong red emission originating from (4)G(5/2) -> H-6(7/2).