Nanoparticles (NPs) are attracting interest in nanomedicine due to their potential medical applications, ranging from optical biolabels and contrast agents for magnetic resonance imaging to carriers for drug and gene delivery for disease therapy. Rare earth (RE) based nanophosphors exhibit important advantages compared with other available luminescent materials, such as quantum dots and nanostructures functionalized with organic dyes, due to their lower toxicities, photostabilities, high thermal and chemical stabilities, high luminescence quantum yields, and sharp emission bands. Yttrium orthovanadate NPs doped with Eu3+ and Bi3+, functionalized with poly acryl acid (PAA), and excitable by near-ultraviolet light have been synthesized by homogeneous precipitation at 120 °C from solutions of rare earth precursors (yttrium acetylacetonate and europium nitrate), bismuth nitrate, sodium orthovanadate, and PAA, in an ethylene glycol/water mixture. Quasispheres with sizes from 93 to 51 nm were obtained. The as synthesized NPs were already functionalized with PAA. The NPs showed the typical red luminescence of Eu3+, which can be excited with near-UV light through an energy transfer from the vanadate anion. The presence of Bi3+ shifts the maximum of the broad excitation band from 280 nm to 342 nm. This excitation path is much more efficient than the direct excitation of the Eu3+ electronic levels, and results in a much higher luminescence. The NPs can be uptaken by HeLa cells, and are eventually located in the lysosomes after being internalized. Finally, the functionalization with PAA provides -COOH anchors for adding functional ligands of biomedical interest that can be used for sensing applications.