Nanocrystalline zirconia co-doped with Yb3+ and Tm3+ ions was prepared by co-precipitation. Up-conversion luminescence of the samples doped with different Tm3+ concentrations was investigated under a 980 nm LD excitation. When x = 0.2 and 0.4, the luminescences of the two samples were mostly the same: strong blue up-conversion peaked at 474 nm and very weak red up-conversion were observed, corresponding to the transitions of 1G4 --> 3H6 and 1G4 --> 3F4 respectively. However, there was no luminescence of x = 1. Blue up-conversion luminescence of 0.2 mol% Tm3+-ions-doped nanocrystalline zirconia under different annealing temperatures was investigated. Blue up-conversion emission grew stronger with annealing temperature increasing. With pumping current increasing, blue up-conversion emission grew stronger too. By studying the sources of blue up-conversion, we concluded that it was three-photon process.