Y2O3:Eu3+ red phosphors were synthesized by laser irradiation of Eu-doped Y2O3 sintered targets immersed in water. The photoluminescence (PL) of the nanoparticles (NPs) was significantly enhanced by adding hydrogen peroxide to the water. Targets were synthesized using three methods, namely, sol–gel (SG), homogeneous-precipitation (HP), and solid-state reaction (SSR) followed by sintering. The sintered SG target contained 8.6 wt% of hexagonal oxygen-deficient byproduct, while the other targets were composed of pure cubic phase. The amount of hexagonal oxygen-deficient and monoclinic by-products in the nanophosphors increased to 33 wt% and 27 wt% in irradiated SG- and HP-derived targets, respectively. The SSR-derived NPs were almost pure cubic phase. Addition of H2O2 to the water minimized the amount of hexagonal oxygen-deficient and monoclinic byproducts (5.7 wt% and 6.4 wt% for SG- and HP-derived NPs respectively). Moreover, the PL of the NPs was enhanced by the formation of a pure cubic phase, and the optimum amount of added H2O2 for maximum luminescence was 5 wt%.