Y2O3 nanoparticles codoped with Yb3+/Li+ ions are synthesized by glycine combustion method. Codoping with 5% mole fraction of Li+ ions leads to about 12 times enhancement of the photoluminescence (PL) intensity around 1 μm under diode laser excitation of 940 nm. The movements of the X-ray main diffraction peak indicate that the codoping of Li+ ions changes the lattice environment of Yb3+ ions. Theoretical investigations based on the steady-state rate equations indicate that the PL enhancement arises mainly from the increased ground state absorption cross section of Yb3+ ions by codoping with Li+ ions. The codoping of Li+ ions can disturb the local crystal field around the Yb3+ ions in Y2O3 crystals, change the PL transition selection rules of Yb3+ ions, resulting in enhanced intra-4f electric-dipole transitions and oscillator strength, which leads to the increase of ground state absorption cross section.