Eu3+ and Dy3+ doped YPO4 nanoparticles dispersible in methanol/water were prepared by the reaction of Y3+ and Eu3+/Dy3+ ions with ammonium dihydrogen phosphate in ethylene glycol medium at 160 degrees C. Nature and extent of strain associated with lattice has been found to change with incorporation of Eu3+/Dy3+ ion in the nanoparticles as well as the heat treatment temperature. Based on the TEM studies, it has been established that particles are highly crystalline with an average particle size of around 5 nm. Co-doping YPO4:Eu nanoparticles with Dy3+ ions followed by annealing them at high temperature (900 degrees C) lead to reduction in both Eu3+ and Dy3+ luminescence intensities from the sample and this has been attributed to the clustering effect of the lanthanide ions.