Spectroscopic properties of trivalent dysprosium (Dy³⁺) activated Y₄Al₂O₉ (abbreviated YAM) crystals have been investigated. The Judd–Ofelt formalism has been applied to the analysis of the room temperature absorption spectrum. The calculated radiative lifetime of the ⁴F_9/2 state is in a very good agreement with the measured one. Branching ratios were obtained from emission spectrum and used in modified Judd–Ofelt method calculations. Concentration dependent fluorescence dynamics profiles have been investigated in Dy³⁺:YAM to understand better processes responsible for concentration quenching of the dysprosium ⁴F_9/2 emission. The cross-relaxation transfer rates were experimentally determined as a function of Dy³⁺ concentration. Decays were modelled using Inokuti–Hirayama approach to obtain an information on the energy transfer mechanism. The lasing properties of Dy³⁺:YAM have been discussed.