Oleic acid-coated erbium–ytterbium co-doped NaYF₄ nanocrystals, NaY₇₈%F₄ : Yb₂₀%Er₂%, have been synthesized. The cubic nanocrystals were of an average size of 10 nm. The nanocrystals showed excellent redispersibility in common organic solvents and the KMBR® polymer matrix. An optical waveguide amplifier was fabricated by doping 0.1 wt% of the nanocrytals into the KMPR® polymeric host. At a small input signal power of 150 nW and a pump power of 150 mW, an optical gain of 4.81 dB cm⁻¹ at 1535 nm was achieved. Copyright © 2010 The Royal Society of Chemistry.