Novel approaches for digital data storage are imperative, as storage capacities are drastically being outpaced by the exponential growth in data generation. Optical data storage represents the most promising alternative to traditional magnetic and solid-state data storage. In this paper, a novel and energy efficient approach to optical data storage using rare-earth ion doped inorganic insulators is demonstrated. In particular, the nanocrystalline alkaline earth halide BaFCl:Sm is shown to provide great potential for multilevel optical data storage. Proof-of-concept demonstrations reveal for the first time that these phosphors could be used for rewritable, multilevel optical data storage on the physical dimensions of a single nanocrystal. Multilevel information storage is based on the very efficient and reversible conversion of Sm to Sm ions upon exposure to UV-C light. The stored information is then read-out using confocal optics by employing the photoluminescence of the Sm ions in the nanocrystals, with the signal strength depending on the UV-C fluence used during the write step. The latter serves as the mechanism for multilevel data storage in the individual nanocrystals, as demonstrated in this paper. This data storage platform has the potential to be extended to 2D and 3D memory for storage densities that could potentially approach petabyte/cm levels.