Er3 ions embedded in silica thin films co-doped by SnO2 nanocrystals are fabricated by sol-gel and spin coating methods. Uniformly distributed 4-nm SnO2 nanocrystals are fabricated, and the nanocrystals showed tetragonal rutile crystalline structures confirmed by transmission electron microscope and X-ray diffraction measurements. A strong characteristic emission located at 1.54 μm from the Er3 ions is identified, and the influences of Sn doping concentrations on photoluminescence properties are systematically evaluated. The emission at 1.54 μm from Er3 ions is enhanced by more than three orders of magnitude, which can be attributed to the effective energy transfer from the defect states of SnO2 nanocrystals to nearby Er3 ions, as revealed by the selective excitation experiments.