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Herein, details on the effect of Ce3+ concentration and annealing temperature on luminescence and scintillation properties of Y3Al5O12:Ce3+ (YAG:Ce3+) nanoscintillator powders, prepared by sol–gel method, have been investigated. Despite extensive research on YAG:Ce3+ single crystal, the behavior of this material at the nanoscale is still not fully understood. The photoluminescence spectra of nanoscintillator powders have been measured and analyzed. To properly assess the scintillation properties, the nanoscintillator sample powders are developed for use as a radiation detector and underwent preparation procedures, including surface homogenization and efficient coupling with a photomultiplier tube window. It is shown that even with nanoscintillator powders, pulse height spectra, with well‐resolved photo‐peak from the Compton edge, and scintillation decay curves are obtained. It is found that 0.5 mol% Ce3+ sample annealed at 1000 °C presents the nonradiative quenching concentration with calculated critical distance of 20.21 Å based on the resonance transfer by electric multipole–multipole interaction. Additionally, the sample detector with 0.5 mol% Ce3+ annealed at 1150 °C exhibits the highest light yield (LY) with value 18 900 ph MeV−1 and a better energy resolution value 10% full‐width and half‐maximum under 662 keV γ‐ray from 137Cs source. [ABSTRACT FROM AUTHOR]