A novel layered transparent Er:CaF2 composite ceramic was proposed in the present study. Er:CaF2 nanoparticles were synthesized by a chemical coprecipitation method. The crystal structures and morphologies of synthesized nanoparticles were performed by X‐ray diffraction (XRD) and field emission scanning electron microscope (FE‐SEM) measurements, respectively. Transparent composite ceramic was fabricated by the combination of multistep dry pressing and hot‐pressed sintering method without any sintering aids or binders. The average grain size of 2% Er‐doped and 5% Er‐doped layers were about 30 and 55 μm, respectively. The thickness of interfacial between two different Er‐doped layers was 150‐200 μm. For a 1.5 mm thickness transparent Er:CaF2 composite ceramic, the optical transmittance reached 44.9% at 500 nm and 53.6% at 1200 nm. The luminescence spectra and thermal conductivities of transparent ceramic specimens were also discussed.