Nanocrystalline BaFCl:Sm3+, as prepared by coprecipitation from aqueous solutions, is an efficient photoluminescent X-ray storage phosphor. In the present study, we report effects on its photoluminescence properties resulting from postannealing treatment in air in the temperature range between 100 to 900 degrees C. Interestingly, upon annealing at temperatures from 200 to 600 degrees C in air, a small fraction of the Sm3+ ions in nanocrystalline BaFCl can be reduced to Sm2+ ions. In addition to the creation of Sm2+ ions, two different sites of Sm3+ ions, denoted as sites A and B, are observed when the nanocrystalline BaFCl:Sm3+ is annealed between 500 to 900 degrees C. The temperature dependence of photoluminescence properties of the two different sites in the 500 degrees C annealed sample reveals that the Sm3+ ions at site A are possibly located at or near the crystallite surface, whereas site B is situated in a very ordered environment. To the best of our knowledge, this is the first report on the reduction of Sm3+ ions doped in alkaline-earth fluorohalides to Sm2+ ions by annealing in air.