Capping ligands are vital in stabilizing various nanostructures and semiconductor quantum dots in which unusual optical properties, especially white light emission, have been realized. Oleic acid (OA) is a widely used capping ligand. Here, we report blue emission from OA in its free molecular form and further demonstrate this by anchoring OA over the surfaces of Al2O3, ZnAl2O4(ZA), ZnAl2O4:Eu3+ (ZA:Eu3+), and Y2O3:Eu3+. White light emission was observed from OA-modified ZA:Eu3+ nanophosphor due to mixing of broad blue emission of OA and red emission of Eu3+ through energy transfer from OA to Eu3+. A detailed study revealed the characteristic binding modes of OA and their dependence on Eu3+ concentration, structural inversion in ZA, and the optical properties and surface states in the pristine and OA-modified ZA:Eu3+. First principles density functional theory calculations were employed to provide an insight into the HOMO-LUMO levels of OA molecule and, electronic structure of pristine and OA-modified ZA surface. The binding of OA with the ZA:xEu3+ surface changes from bridging bidentate to chelating bidentate with increasing Eu3+ concentration in the lattice. The surface binding nature of the carboxylate group with the optimized surface of ZA and the creation of mid-gap states were deduced theoretically by using butanoic acid instead of OA. The blue emission from OA and its mixing with Eu3+ emission was further confirmed experimentally by anchoring it over Y2O3:Eu3+ red phosphor. These results show the multifunctional roles of OA as capping ligand, blue emitter and sensitizer in tuning the emission colour of red phosphors into white.