The structural, surface morphological, optical absorption and emission features of Y2O3:Ce (0%–5%) were studied. The samples had a body‐centred cubic crystal structure. The undoped sample had a crystallite size of 29.03 nm, and it varied after doping with Ce. The grain size of the samples varied from 23.00 to 50.78 nm. All the samples exhibited a strong absorption band at 206 nm due to F‐centre absorption and absorption involving the delocalised bands. In addition, the doped samples exhibited a secondary band at ~250 nm due to 4f → 5d transitions of Ce3+ ions. The optical bandgap of the undoped sample was found to be ~5.37 eV, and it decreased to 5.20 eV with an increase in Ce concentration to 5%. The undoped sample under 350‐nm excitation exhibited a broad photoluminescence (PL) emission band with the maxima at 406 nm and a secondary band at 463 nm. In contrast, multiple PL peaks were centred at ~397, 436, 466, 488 and 563 nm in all the doped samples. The average lifetime of the emission band at 406 nm was 1.05 ns and that of the emission band at ~466 nm was 1.63 ns. The material has potential for solid‐state lighting applications.