Selection of the correct crystalline phase in the NaYF<sub>4</sub>:Er nanomaterial system is expected to increase the upconversion photoluminescence efficiency for potential solar cell applications in the near IR region. Further, several recent reports involve the use of the cubic phase for biomedical in situ pressure sensing applications. Thus, it is vital to understand the precise annealing conditions necessary for the rational design of the nanomaterial species. We report the initial studies on phase purity (cubic and hexagonal phase) of NaYF<sub>4</sub>:Yb (18%), Er (2%) using thermal decomposition at 320°C. The as-synthesized (spherical and cubic) agglomerated nanoparticles were estimated to have a mean size of 200 nm from scanning electron microscopy (SEM), and present as aggregated particles in high-resolution transmission electron microscopy data (HRTEM). Powder X-ray diffraction (PXRD) measurements were carried out to infer the relative abundance of the two phases as a function of air annealing at different temperatures. Contrary to previously reported partial studies, we find that the initial mixed phase of 50:50 composition remains resistant to any change until 450°C, at which point the content of the hexagonal phase starts declining, resulting in a nearly pure cubic phase at 550°C. Thus, it is found that hexagonal phase does not dominate the product at any reasonably low processing temperature. Photoluminescence (PL) measurements on the unannealed material at 785 nm result in localized broadband emission in green (centered at 540 nm) and red (centered at 660 nm). This work establishes optimal annealing conditions for this important photonic nanomaterial for potential biomedical applications.