The luminescence properties of erbium and yttrium co‐doped cadmium difluoride with three different concentrations of yttrium were investigated. First, we synthesized single crystal samples with good optical quality using the Bridgman technique. From the optical absorption spectra, recorded at room temperature, both in the ultraviolet–visible and infrared spectral ranges, Judd–Ofelt analysis was performed based on yttrium concentrations to predict the radiative properties of Er3+ luminescent ions. For the 10% optimum concentration of yttrium, a detailed photoluminescence investigation was carried out. We mainly explored green, red, and near‐infrared fluorescence under different excitation wavelengths and presented their highlight spectroscopic characteristics. The desired transitions had relatively high emission cross‐sections both under visible and near‐infrared excitation. Optical gain followed a similar trend. Furthermore, the dynamic fluorescence study showed a significant increase in the measured lifetime under an 800 nm infrared excitation. The upconversion process under an 800 nm excitation produced quantum efficiency greater than 100% due to the contribution of more than one energy transfer mechanism.