We demonstrate nanostructural evolution resulting in highly increased photoluminescence in silicates doped with Er3+ ions. High-resolution transmission electron microscopy (HRTEM) imaging, nano-energy dispersed X-ray (NEDX) spectroscopy, X-ray diffraction (XRD) and photoluminescence analysis confirm the local composition and structure changes of the Er3+ ions upon thermal annealing. We studied two types of amorphous nanopowder: the first is of the composition SiO2/18Al2O3/2Er2O3 (SAE), synthesized by combustion flame-chemical vapor condensation, and the second is with a composition of SiO2/8Y2O3/2Er2O3 (SYE), synthesized by sol-gel synthesis (composition in mol%). Electron diffraction and HRTEM imaging clearly show the formation of nanocrystallites with an average diameter of approximately 8 nm in SAE samples annealed at 1000 degrees C and SYE samples annealed at 1200 degrees C. The volume fraction of the nanocrystalline phase increased with each heat treatment, eventually leading to complete devitrification at 1400 degrees C. Further XRD and NEDX analysis indicates that the nanocrystalline phase has the pyrochlore structure with the formula Er(x)Al(2-x)Si2O7 or Er(x)Y(2-x)Si2O7 and a surrounding silica matrix.