The defect formation energy of LuPO4 crystal is calculated by generalized gradient approximation combined with plane wave pseudo-potential based on density functional theory. The periodic arrangement of the defect introduces artifical interactions is corrected. The oxygen vacancy defect formation energy in different charged states is obtained accurately, and band gap is modified through Hybrid functional. The optical line shapes are described by the defect formation energy and electron-phonon coupling. The comparison of LuPO4∶Nd experimental and calculated results shows the absorption peak of F center are superimposed on Nd3+ 5d—4f emission (located at 189 nm). It is inferred that F center is found to be responsible for the limited light yield in LuPO4∶Nd.