Ce doped yttrium aluminum garnet (Ce:YAG) is an important photonic material that is used as a yellow phosphor for white light emitting diodes. In this work, the physical and optical properties of Ce:YAG nanophosphors are investigated and the effects of hightemperature thermal treatments and annealing atmospheres on the particle size and luminescence intensity are discussed. Furthermore, photo-luminescence (PL) was measured as a function of temperature and compared with PL from Ce:YAG single crystals and transparent ceramics to understand the mechanism of luminescence decay with temperature. While the characteristics of PL emission as a function of temperature for single crystals and NPs are similar and follow common decay trends, Ce:YAG transparent ceramics exhibit an interesting unusual increase in PL with temperature. We explained this unique novel behavior by a 4-step mechanism involving localized states in the band gap, and provided evidence from thermoluminescence measurements to support this interpretation. The work reveals a new luminescence phenomenon arising from the overlap of PL and TL emissions; this phenomenon is most likely characteristic of transparent ceramics.