Eu 3+ (8mol%) activated gadolinium oxide nanorods have been prepared by hydrothermal method without and with surfactant, cityl trimethyl ammonium bromide (CTAB). Powder X-ray diffraction (PXRD) studies reveal that the as-formed product is in hexagonal Gd(OH) 3 :Eu phase and subsequent heat treatment at 350 and 600°C transforms the sample to monoclinic GdOOH:Eu and cubic Gd 2 O 3 :Eu phases, respectively. The structural data and refinement parameters for cubic Gd 2 O 3 :Eu nanorods were calculated by the Rietveld refinement. SEM and TEM micrographs show that as-obtained Gd(OH) 3 :Eu consists of uniform nanorods in high yield with uniform diameters of about 15nm and lengths of about 50–150nm. The temperature dependent morphological evolution of Gd 2 O 3 :Eu without and with CTAB surfactant was studied. FTIR studies reveal that CTAB surfactant plays an important role in converting cubic Gd 2 O 3 :Eu to hexagonal Gd(OH) 3 :Eu. The strong and intense Raman peak at 489cm −1 has been assigned to A g mode, which is attributed to the hexagonal phase of Gd 2 O 3 . The peak at ∼360cm −1 has been assigned to the combination of F g and E g modes, which is mainly attributed to the cubic Gd 2 O 3 phase. The shift in frequency and broadening of the Raman modes have been attributed to the decrease in crystallite dimension to the nanometer scale as a result of phonon confinement.