The structural and photoluminescence properties of Eu3+-doped Y2Sn2O7 nanoparticles have been systematically studied as a function of heat treatment temperature. Crystalline Y2Sn2O7:Eu nanoparticles with sizes in the range of 2–5 nm were prepared at the relatively low temperature of 700 °C. Based on the Rietveld refinement of powder X-ray diffraction patterns, it was confirmed that the YO8/EuO8 polyhedra in the Y2Sn2O7:Eu lattice become more symmetric as the annealing temperature increases. The extent of distortion of the YO8/EuO8 polyhedra is reflected in the luminescence parameters Ω2 and Ω4, which are a measure of the polarizability of Y–O and Eu–O bonds in the lattice. There are a significant number of surface Eu3+ ions in the nanoparticles annealed at 700 °C and the emission intensities of the Eu3+ ions in the nanoparticles are mainly decided by the surface Eu3+ ions, the concentration of which decreases with increasing temperature. Incorporation of the nanoparticles in a poly(methyl methacrylate) (PMMA) matrix leads to a decrease in the 5D0 lifetime and this has been attributed to the quenching of the excited states of surface Eu3+ ions through the vibrations of different structural units in PMMA.