Tm3+:LaF3 nanocrystals were synthesized with hydrothermal technique. Local‐field effect on the radiative relaxation rate was studied in the system of Tm3+:LaF3 nanocrystals immersed in several liquid media. The fluorescence lifetime was measured. It was found that the fluorescence decay presented the characteristics of second‐order exponential decay, for which the contribution from the ions inside the nanocrystal and ions at the interface of the nanocrystal were distinguished. Investigating the experimental results with proposed models, we found that the surface effect had to be eliminated. For rare earth doped LaF3 nanocrystals, real‐cavity model well explains the influence of surrounding medium on the fluorescence relaxation rate. Copyright © 2009 John Wiley & Sons, Ltd.