The synthesis and characterization of yttrium hydroxyl carbonate (Y(OH)CO32-) and yttrium nitrate hydroxide hydrate (Y(OH)NO3H2O) precursor materials as well as Y2O3 nanoparticles are reported. The resultant precursor particle size is about 10-12 nm with a narrow size distribution by the enzymatic decomposition method, whereas the particle size was smaller than those acquired by the homogeneous and alkali precipitation methods. The formation of Y(OH)CO32- and (Y(OH)NO3H2O) species was also evident from the fourier-transform infrared spectrometry (FT-IR) analysis. Precipitated Y(OH)CO32-precursors have an amorphous nature whereas (Y(OH)NO3H2O) precursors have a crystalline nature, which was manifested from the XRD analysis. Moreover, precipitated Y( OH) NO3H2O precursors were found in the agglomerated form and Y(OH)CO32- was established in the monodispersed form, as determined from the FE-SEM, TEM and DLS measurements. It was demonstrated that calcination of precursor materials at 900 degrees C eventually removed the inorganic anions from the precursors and consequently produced crystalline Y2O3 nanoparticles, which was evident from the XRD and FT-IR analysis. The EDS analysis confirms Er3+ doping in the Y2O3 nanoparticles. The morphology and the size of the Y2O3 nanoparticles are almost unchanged before and after the calcination.