Self-assembly layered rare-earth hydroxide (LRH) nanosheets of ternary Y/Gd/Eu system were synthesized at freezing temperature by a chemical precipitation route. The anion-exchange behaviors and optical properties of the LRHs were studied. At the SO42-/Ln3+ molar ratio (R) of 0.25, the SO42- almost repalces the NO3- located in the interlayer of the LRH via anion exchange, however, the photoluminescence (PL) intensity decreases. Gd3+ substitution for Y3+ has significantly changed the coordination environment of Eu3+, leading to different intensities for the splitting bands of 5D0→7FJ transition peaking at ~590 and 595 nm. Sulfate exchange inhibits surface diffusion and inter-particle sintering during calcination and well-dispersed oxide powders that exhibit typical Eu3+ red emission were hence obtained. Gd3+ addition sensitizes Eu3+ emission to enhance the PL intensity of the phosphors. Improved PL intensity and external quantum efficiency and decreasing fluorescence lifetime were observed at a higher calcination temperature.