Defects, both native and extrinsic, critically determine functional properties of metal oxides. Gallium oxide has recently gained significant attention for its promise in microelectronics, owing to the unique combination of conductivity and high breakdown voltage, and solid-state lighting, owing to the strong photoluminescence in the visible spectral region. These properties are associated with the presence of native defects that can form both donor and acceptor states in Ga2O3. Recently, Ga2O3 nanocrystal synthesis in solution and optical glasses has been developed, allowing for a range of new applications in photonics, lighting, and photocatalysis. This review focuses on the structure and properties of Ga2O3 nanocrystals with a particular emphasis on the electronic structure and interaction of defects in reduced dimensions and their role in the observed photoluminescence properties. In addition to native defects, the effect of selected external impurities, including lanthanide and aliovalent dopants, and alloying on the emission properties of Ga2O3 nanocrystals are also discussed.