Transition to circular economy requires the production of sustainable and eco-designed materials that help to reduce environmental impacts of metallic components. The development of sensing layers providing luminescent tracking functionalities is a potential method for extending the service life of metallic parts. In this study, incorporation of luminescent Ce3+ doped yttrium aluminum garnet (YAG:Ce) within a stainless steel 316L (SS316L) matrix has been achieved for the first time by laser powder bed fusion (L-PBF). Embedding of phosphor particles was successfully carried out on a selected area of the 3D printed sample. Despite harsh processing conditions of L-PBF, luminescent emission was detected by optical spectroscopy. Microstructure and chemical composition of the incorporation zone were investigated in order to better understand optical properties. The precipitated particles exhibit new optical features, arising from the modification of the luminescent host lattice and the intricate interactions with the metal matrix.