Yb:YAG and Nd:YAG nanocrystals were synthesized by ultrasound-microwave-assisted alkoxide hydrolysis precipitation method. The effect of reaction parameters including the microwave radiation power, microwave radiation time and calcination temperature on the composition of the products was investigated. The Yb:YAG and Nd:YAG nanocrystals were characterized by X-ray powder diffraction (XRD), scanning electron microscopy (SEM), high-resolution transmission electron microscopy (HRTEM) and photoluminescence (PL) spectrum. The results show that the pure phase Yb:YAG and Nd:YAG nanocrystals can be obtained at microwave radiation power of 385W, microwave radiation time of 30 min and calcination temperature of 1100 C. The cooperative luminescent intensities of the Yb:YAG and Nd:YAG nanocrystals reached the maximum at the calcination temperature of 1100 C.