Rare‐earth metal oxyhydride compositions are currently attracting increasing attention to develop materials with unusual optical responses. Herein, using computer simulations of the electronic and optical properties, the optical responses of two stable yttrium oxyhydride compounds, normalY4normalH10O and YHO, are studied for the visible light range. The emphasis is on modeling macroscopic optical characteristics, which are numerically derived within a conventional scheme using refractive indices, and absorption, transmittance, and reflection spectra. The main goal is twofold: first, to simulate spectral behavior of different single‐phase and two‐phase oxyhydride compositions and second, to conduct a comparative analysis that could explain the features of the transmission spectra measured for different samples. Based on the obtained results, models of new optical coatings are proposed in which yttrium oxyhydrides play the key role. In the context of nonlinear optics, the frequency profile of the second‐order susceptibility χ(2)(2ω) for the noncentrosymmetric cubic structure of normalY4normalH10O is evaluated and it is shown that this system could exhibit large optical nonlinearity.