YAG:Nd powders obtained by grinding a single crystal and synthesized by modified sol–gel and combustion methods were embedded at the stage of melting in a multicomponent borate glass to obtain luminescent glass–ceramic systems. Room temperature optical absorption spectra, luminescence spectra at room temperature and at 10K and micro-Raman spectra were recorded to determine the location of Nd 3+ ions in composite materials. It has been concluded that their luminescence characteristics depend critically on the preparation method hence the morphology of precursor crystalline YAG:Nd powders as a consequence of dissimilar solubility of crystallites in a host glass.