Er3+ ions embedded in silica thin films co-doped by SnO2 nanocrystals are fabricated by sol-gel and spin coating methods. Uniformly distributed 4-nm SnO2 nanocrystals are fabricated, and the nanocrystals showed tetragonal rutile crystalline structures confirmed by transmission electron microscope and X-ray diffraction measurements. A strong characteristic emission located at 1.54 μm from the Er3+ ions is identified, and the influences of Sn doping concentrations on photoluminescence properties are systematically evaluated. The emission at 1.54 μm from Er3+ ions is enhanced by more than three orders of magnitude, which can be attributed to the effective energy transfer from the defect states of SnO2 nanocrystals to nearby Er3+ ions, as revealed by the selective excitation experiments.