In recent years, rare earth doped nanoparticles have been proposed for a number of exciting applications in a wide-range of fields including nanomedicine, nanoelectronics, biosensing, bioimaging, photovoltaics, photocatalysis, etc. This is due, primarily, to their interesting and versatile optical properties including their inherent ability to convert low-energy near-infrared (NIR) light to higher energies spanning the UV, visible, and NIR regions of the spectrum via a process known as upconversion. Upconversion, inherent to the rare earths, results from the multitude of 4f electronic energy states, many of which are spaced equally and long-lived, that facilitate the absorption of multiple low energy photons to populate the higher energy emitting states. Thus, upconversion is a multiphoton process, but unlike other two-photon excited materials, the need for expensive ultrafast lasers is eliminated since the simultaneous absorption of multiple photons is not required; due to the long lifetimes of the rare earth ion excited states, sequential absorption occurs efficiently. Moreover, following NIR excitation, these nanoparticles can also undergo conventional luminescence and emit in the three NIR biological windows where tissues are optically transparent. Here, we will discuss the luminescence properties of rare earth doped nanoparticles and present a perspective on both their applicability as well as drawbacks for use in various applications. Finally, we will demonstrate that the intelligent combination of diverse materials, with different properties, will allow for the engineering of novel multifunctional nanostructures, which can usher in a new era for rare earth doped nanoparticles.