Oleic acid modified LaF₃:Er,Yb nanocrystals have been synthesized with a molar ratio of La:Yb:Er=75:20:5 and dispersed in toluene with 40 wt. % sol–gel derived organic–inorganic hybrid materials for films. The nanocomposite films showed strong 1540-nm luminescence intensity under the excitation of 980 nm after heat treatment below 150 °C. The full width at half maximum bandwidth was 51-nm wide around 1540 nm. We also fabricated reverse-mesa ridge waveguides using LaF₃:Er,Yb nanocrystals containing sol–gel materials. With an input pump of 150 mW, a signal enhancement of 2.3 dB at the wavelength of 1550 nm was measured in a 1.3-cm-long waveguide.