We investigate the effects of erbium doping on SnO(2) nanoclustering in Sn-doped silica. Vibrational spectroscopy data from Raman and infrared absorption measurements show nanostructuring effects on the SnO(2) nanophase. Ultraviolet absorption spectra evidence a gap shift ascribable to size-dependent quantum confinement, also suggesting a role of erbium doping in determining cluster sizes and the amount of localized states on the nanophase boundary. Transmission electron microscopy confirms and details the spectroscopic data. As a result of these measurements, we find that the nanocrystal size distribution becomes narrower, increasing the erbium concentration, while the density of localized states at the nanocrystal surface decreases. The distribution of erbium ions among the possible environments is then examined through simultaneous spectroscopy of luminescence excited by nanocrystal-to-erbium energy transfer and the absorption of nanocrystal luminescence by erbium ions. This analysis shows that erbium behaves as an extrinsic nucleation centre of the SnO(2) nanophase at low doping levels, whereas at high concentrations it modifies the matrix, hindering the growth of SnO(2) crystals and passivating the interface.