ZrO2:Eu3+ nanocrystals were prepared by the sol-gel technique. The structural and luminescence properties of europium doped zirconia with 0.5 to 2 mol% were studied by Mössbauer spectroscopy, Raman spectroscopy, X-ray diffraction (XRD), High Resolution Transmission Electron Microscopy (HRTEM) and photoluminescence (PL) under UV excitation. Structural characterization shows a crystallite size between 16 to 55 nm and monoclinic and tetragonal zirconia phases as the main crystalline structure. XRD patterns shown that the content of the active ions stabilizes the tetragonal structure of ZrO2 at 1000 degrees C, being 100% for 2 mol% Eu2O3 doped sample. Such results are in agreement with HRTEM and Raman spectroscopy. The Mössbauer spectra of the ZrO2:Eu3+ samples show a single peak near zero velocity which is attributed to Eu+3. Luminescence characterization shows the typical emission band centered at 595 and 611 nm. Change in the structure of such band was observed and explained in terms of crystalline phase change. The dependence between the fluorescence emission and the crystalline structure is discussed.