99.8[(1−x%)Al(PO3)3−x%Li2O]‐0.2Nd2O3 glasses (mol%, x = 0, 5, 10, 15, 20) were prepared by high‐temperature melt and quenching method. The effect of Li2O replacing Al(PO3)3 on the physical, mechanical, and optical properties was correlated with the network structures and the local environment around Nd3+ ions, which were obtained via Raman scattering spectra, solid‐state nuclear magnetic resonance (SSNMR), and pulse electron paramagnetic resonance (EPR) techniques. SSNMR results indicate that the addition of Li+ ions cannot affect the connectivity between P and Al while it can break the P‐O‐P linkages resulting in the depolymerization of glass networks. EPR spectra indicate an increasing engagement of lithium around Nd3+ ions with the increase of Li2O. The Judd‐Ofelt (J‐O) parameters Ω4,6 increase, but Ω2 decreases. The emission cross section at 1053 nm and quantum efficiency are improved by 27% and 31%, respectively. The work is helpful for understanding the evolution mechanism of emission properties and structures in Nd3+‐doped Al(PO3)3‐Li2O phosphate glasses.