Er-doped SnO2 nanoparticles were synthesized with varying Er concentration by a sol–gel method. X-ray diffraction (XRD) and high-resolution transmission electron microscopic studies reveal the crystalline nature of the nanoparticles and the crystallite size decreases with the increase of Er concentration in SnO2. For higher Er concentration, the evolution of Er2O3 as a secondary phase is detected. The X-ray photoelectron spectroscopy (XPS) study depicts the existence of 4d level of Er along with a partially filled 4f state. Infrared photoluminescence (IRPL) measurement shows a strong emission peak at 1540 nm due to Er doping in the SnO2 nanoparticles, which quenches after 3 at% of Er concentration. Magnetic measurement reveals the antiferromagnetic (AFM) behavior of the Er-doped samples, though there is an increase in magnetic moment with increase in Er concentration. Undoped SnO2 shows a weak ferromagnetic interaction, which could be due to the presence of anionic defects (O vacancy).