Efficient wavelength converting nanophosphors are of high demand for their applications in energy conversion devices. We report on the synthesis of well dispersed LiAl5O8:Fe3+ nanoparticles of homogeneous size and different morphologies by sol–gel method suitable for efficient wavelength converting devices. Nanoparticles of phase pure Fe3+ doped LiAl5O8 with different shapes and sizes were obtained by varying the pH of the solution in the range of 3–11. X-ray diffraction, transmission electron microscopy and X-ray photoelectron spectroscopy were used to analyze the structure, morphology and composition of the nanoparticles. Incorporation of Fe3+ ions in the LiAl5O8 host lattice has been studied using X-ray photoelectron spectroscopy and electron spin resonance spectroscopy. Emission behavior of the nanophosphors has been studied at room temperature using photoluminescence spectroscopy.