Here, we report the role of crystallite size and surrounding medium on the upconversion emission of Er3+ in BaTiO3 oxide nanocrystals. The samples were prepared by sol-emulsion-gel method and heat-treated at two different temperatures yielding powders containing nanoparticles of different sizes. Green (550 nm) and red (660 nm) upconversion emission were observed at room temperature from the 4S3/2 and 4F9/2 levels of BaTiO3:Er3+ nanocrystals. The pump power dependence study confirms that all these upconversion emission lines are a two-photon absorption process. We observed that the luminescence lifetime is shorter for the sample containing smaller particles. Optical thermometry experiments were performed in air, water and glycerol in a temperature range from 27.1 up to 47.1 degrees C aiming to use this material as a biological temperature sensor.