In this work, hexagonal solid solutions of (Gd0.95Eu0.05)(OH)3 with two distinctive morphologies of nanorods and nanotubes were successfully synthesized via hydrothermal treatment of mixed nitrate solutions in the presence of ammonium hydroxide. The hydroxide samples exhibited characteristic Eu3+ photoluminescence through the energy transfer from Gd3+ to Eu3+ and the self-excitation of Eu3+. The hydroxide precursors transformed into cubic (Gd0.95Eu0.05)2O3 at ~500 °C via an intermediate monoclinic (Gd0.95Eu0.05)OOH phase, and the Eu3+ coordination accordingly experienced symmetry changes from D3h to C2v, and then to C2/S6. The cubic (Gd0.95Eu0.05)2O3 well retained the original morphologies of their polycrystalline precursors and exhibited a single-crystalline character at 1000 °C. Greatly enhanced photoluminescence (~5000 times that of the hydroxides) was observed for the phase conversion.