Aqueous, dispersible, luminescent YPO4:Eu3+-K+ and hybrid magnetic-luminescent Fe3O4@YPO4:Eu3+-K+ nanoparticles are prepared at an optimum temperature with a simple synthesis route. The shape of YPO4:Eu3+-K+ nanoparticles is found to be nanorods. Photoluminescence spectrum of a sample upon excitation at 395 nm shows the characteristic peaks of Eu3+ such as magnetic–dipole transition (5D0 → 7F1) at 592 nm, the electric–dipole transition (5D0 → 7F2) at 615 nm, and electric–dipole transition (5D0 → 7F4) at 695 nm. Luminescence intensity increases with K+ doping. Interestingly, their luminescence intensities are almost the same. This could be explained by the polarizability effect of the PO4 3– group and K+ upon emission of Eu3+. This high intensity at 695 nm will be useful in bioimaging since this wavelength falls in biological window I. This hybrid material shows a hyperthermia temperature under an AC magnetic field, making this material a potential candidate for cancer therapy.