The luminescence properties of Eu3+ encapsulated in sol-gel-derived optically transparent silica gels were investigated by time-resolved laser spectroscopy. At the xerogel stage, the emission spectra originated mainly from Eu2+ at 410 nm, and only a small contribution from Eu3+ at 580 nm and electron-hole (e(-)-h(+)) carrier at 530 nm were observed. It is proposed that in the presence of Eu3+ the carriers, e(-)-h(+), were generated during the polycondensation reaction of silica and trapped at the defect sites of sol-gel matrix. The formation of e(-)-h(+) carrier was illustrated to be responsible for the surface-assisted reduction of europium ions, where the ejected electrons from the oxygen-associated hole centers react with Eu3+ encapsulated in silica gel to produce Eu2+ ions.