The discovery of new lanthanide properties in layered rare-earth hydroxides is tremendously important to developing novel materials with the advantages of both lanthanides and layered hydroxides. Herein, a polyethylenimine-assisted hydrothermal route for preparing Ce-doped layered yttrium hydroxide nanoplates (LYH:Ce NPs) is established, in which the Ce doping provides simultaneous control of the size and fluorescent properties. Typically, 10% Ce doping tailors the average particle size from 680 to 196 nm and induces bright blue luminescence with a quantum efficiency of over 10.0%. Owing to the much more efficient f–d Ce3+ transition, the LYH:Ce NPs show three orders of magnitude stronger photoluminescence than LYH:Eu and LYH:Tb NPs, and exhibit the properties required to fabricate switched “on/off” optical sensors by controlling the Ce3+ ↔ Ce4+ redox couple. Furthermore, by combining the merits of the luminescence of Ce3+ dopants and anion-exchange ability of an LYH host, the LYH:Ce NPs exhibit the properties necessary for photofunctional materials for photosensitized singlet oxygen production.