Neodymium ion (Nd³⁺)-doped yttrium aluminum borate (YAB) nonlinear laser materials show strong prospects for highly efficient laser oscillations in kinds of multi-frequency conversion systems. Although excellent optical and spectroscopic properties for Nd-doped YAB have been demonstrated, detailed information of its microstructure as well as the incorporation of the laser ion Nd³⁺ is still lacking. Herein, the structural evolution of NdₓY1-xAl₃(BO₃)₄ systems are systematically investigated using the CALYPSO structure search method in conjunction with first-principles calculations. Our study demonstrates a stable configuration with C2 space group for a Nd-doped YAB crystal, which suggests that the impurity Nd³⁺ ions can accurately substitute for Y³⁺ sites. With the increase in Nd concentration, two traditional structures of NdAl₃(BO₃)₄, γ-NAB and β-NAB, are identified and compared with previous experimental measurements. For the local [NdO₆]⁹⁻ unit, we introduced the correlation crystal field Hamiltonian to analyze the energy levels and have obtained a new set of crystal field parameters which leads to an improved fit with a RMS deviation of 13.32 cm⁻¹ between the 135 theoretical and observed Stark levels. Our results could largely account for the well-known anomalous splitting of the 2H11/2 multiplets. Additionally, the transition intensities from the excited states to ground 4I9/2, including electric dipole and magnetic dipole contributions, are calculated. It is found that the characterization of two emission lines 4F5/2 → 4I9/2 and 2H(2)9/2 → 4I9/2, occurring at approximately 800 nm, is totally different. These findings provide a deep understanding of rare-earth doped laser materials and suggest a new way to explore the luminescence properties of such materials. Copyright © 2017 The Royal Society of Chemistry.