α-SiAlON ceramics have been in use as engineering ceramics in the most arduous industrial environments such as molten metal handling, cutting tools, gas turbine engines, extrusion molds, thermocouple sheaths, protective cover for high-temperature sensors, etc., owing to their outstanding mechanical, thermal and chemical stability. Taking advantage of the intrinsic properties of α-SiAlONs, we investigate, in this paper, the possibility of using the Er-doped α-SiAlON (Er-α-SiAlON) ceramic as a high-temperature sensing material via its unique near-infrared to visible upconversion property. We first use neutron diffraction and density functional theory calculations to study the electronic structure and thermodynamic stability of Er-α-SiAlON. It is found that the interstitial doping of Er stabilizes the α-SiAlON structure via chemical bonds with O-atoms with N:O ratio of 5:2 in the seven-fold coordination sites of the Er3+ ion. Temperature-dependent upconversion emissions are then studied under 980 and 793 nm excitations over a temperature range of 298-1373 K and the fluorescence intensity ratio (FIR) technique has been employed to investigate the temperature sensing behavior. Temperature-dependent Raman behavior is also investigated. We demonstrate that using Er-α-SiAlON as a sensing material, the limit of temperature measurement via the FIR technique can be pushed well beyond 1200 K.