Neodymium ion (Nd³⁺)-doped yttrium lithium fluoride (LiYF₄, YLF) laser crystals have shown significant prospects as excellent laser materials in many kinds of solid-state laser systems. However, the origins of the detailed information of their local structure and luminescence evolution are still poorly understood. Herein, we use an unbiased CALYPSO structure searching technique and density functional theory to study the local structure of Nd³⁺-doped YLF. Our results reveal a new stable phase with the P4 (No. 81) space group for Nd³⁺-doped YLF, indicating that the host Y³⁺ ion site was naturally occupied by the Nd³⁺ ion impurity. On the basis of our newly developed WEPMD method, we adopt a specific type of orthogonal correlation crystal field to obtain a new set of crystal-field parameters as well as 182 complete Stark energy levels. Many absorption and emission lines for Nd³⁺-doped YLF are calculated and discussed based on Judd–Ofelt theory, and our results indicate that some of the observed absorption and emission lines are perfectly reproduced by our theoretical calculations. Additionally, we predict several promising transition lines in the visible and near-infrared spectral regions, including the electronic dipole emission lines ⁴F₅ ̷₂→ ⁴I₉ ̷₂ at 808 nm and ²H₉ ̷₂ → ⁴I₉ ̷₂ at 799 nm, as well as the magnetic dipole emission lines ⁴F₃ ̷₂(27) → ⁴I₁₁ ̷₂(6) at 1047 nm and ⁴F₃ ̷₂(27) → ⁴I₁₁ ̷₂(8) at 1052 nm. These transition channels indicate that Nd³⁺-doped YLF laser crystals have greatly promising laser actions for serving as a solid-state laser material. Copyright © 2020 the Owner Societies.