Herein we describe the synthesis and luminescence of nanosized (LuGd)OS:Tb and (LuGd)O:Tb phosphors with y = 0.1 mol% Tb and y = 2 mol% Tb and x ranging between 0 and 1. The concentration of Gd (x) was varied in steps of 0.1 (molar ratio Gd). The samples at 0.1 < x < 0.7 contained a mixture of (LuGd)O:Tb and (LuGd)OS:Tb, while the samples at x = 0 contained only LuO:Tb. At 0.1 < x < 0.7 LuOS:Tb and GdOS:Tb did not form a solid solution, but rather crystallised into two slightly different hexagonal structures. This behaviour has been explained in terms of segregation of Lu and Gd between the oxide and oxysulfide phases: the oxide phase is more Lu-rich whereas the second oxysulfide phase is more Gd-rich. The photoluminescence spectra of the phosphors with 0.1 mol% Tb showed a modest colour change of the fluorescence light from cyan to green when x was increased from 0 to 1, whereas the samples of the series with 2 mol% Tb yielded essentially green light. From this analysis it was concluded that the colour change of (LuGd)OS:0.1%Tb is caused by increasing energy transfer of the D-level of Tb to the charge transfer band of (LuGd)OS:Tb upon increasing x. Since the samples with 100% Lu consisted of pure cubic LuO:Tb, we had the opportunity to also study the symmetry-related PL of this compound. From this study we concluded that the C-C doublet of the TbD → F transition behaves in the same way as the corresponding doublet in cubic YO:Tb.