Water-soluble upconversion nanoparticles (UCNPs), based on polyvinylpyrrolidone (PVP)-coated NaYF4:Er3+,Yb3+,Gd3+, with various concentrations of Gd3+ ions and relatively high upconversion efficiencies, were synthesized. The internalization and cytotoxicity of the thus obtained UCNPs were evaluated in three cell lines (HeLa, HEK293 and astrocytes). No cytotoxicity was observed even at concentrations of UCNPs up to 50 μg ml-1. The fate of the UCNPs within the cells was studied by examining their upconversion emission spectra with confocal microscopy and confirming these observations with transmission electron microscopy. It was found that the cellular uptake of the UCNPs occurred primarily by clathrin-mediated endocytosis, whereas they were secreted from the cells via lysosomal exocytosis. The results of this study, focused on the mechanisms of the cellular uptake, localization and secretion of UCNPs, demonstrate, for the first time, the co-localization of UCNPs within discrete cell organelles.