Downsizing lanthanide-doped crystals to the nanoscale allows for new applications in a variety of forms as photonic composites. The dipole-forbidden 4f transitions in trivalent lanthanide ions promise high excited state lifetimes and quantum yields that are required for a plethora of applications, e.g., in lasers, phosphors, and quantum memories. However, nanocrystals undergo excitation quenching which takes mostly place at the nanocrystal surface and severely reduces the lifetime and quantum yield. So far, optimizing lanthanide nanocrystals required resource-consuming experimental procedures covering multiple syntheses, complex morphological characterization and extensive spectroscopy. In this thesis, LiYF4:Pr3+ was chosen as a model system becauseit is frequently used as bulk laser crystal whose spectroscopic properties are well investigated. A concentration series consisting of four samples (∼10nm, 0.7 − 1.47 at%) and a size series consisting of five samples (∼5 at%, 12−21nm) was spectroscopically characterized. As the main result of this investigation, an unexpected yet intense emission was observed that in bulk crystals is only exploitable through excitation of a different, subjacent energy level. Considering the spectroscopic results, a numerical model based on a Monte Carlo approach was implemented that takes the relevant energy exchange and quenching mechanisms into account. As main result of the present thesis, the numerical simulations were able to predict the excited statelifetimes and quantum yields of the nanocrystals with a maximum uncertainty of 12.6% for the lifetimes. To demonstrate the potential of this numerical approach, an undoped shell was added around the core particles in the model which extends the lifetime by up to 44%. Furthermore, spatiotemporal analysis of single nanocrystals points towards a new type of energy trapping in lanthanide nanocrystals. The numerical approach presented in this thesis constitutes an enormous potential for nanocrystal research, since it can be employed in any material system such as upconversion or avalanching nanocrystals. In the future, the considered approach allows for numerical optimization of the LiYF4:Pr3+ nanocrystals for application as quantum memories, lanthanide-based ratiometric nanothermometers, or efficient fused silica fiber lasers operating in the visible spectrum.