This work presents the first time synthesis of photon upconverting cubic BaYF5:Yb-3, Er3+ nanoclusters by a novel reverse microemulsion method. Rietveld refinement analysis confirmed the cubic BaYF5 and BaYF5:Yb, Er. The spherical nanoclusters (similar to 35 nm) are formed by an ensemble of similar to 10 nm individual nanocrystals. A plausible formation mechanism is explained based on HRSEM and HRTEM investigations. FTIR revealed the effect of CTAB and oleic acid surfactants on amine and carboxyl functionalization. The cubic BaYF5:Yb,Er nanoclusters exhibited an intense green upconversion emission under 980 nm excitation. A three-fold upconversion green emission enhancement was achieved by increasing the calcination temperature from 200 degrees C to 400 degrees C. The energy transfer mechanism is described based on pump power dependent upconversion luminescence intensity. Furthermore, cytotoxicity effect of the different concentrations (2.5-300 mu g/mL) of the BaYF5:Yb, Er were investigated against human colon adenocarcinoma cell line (HT29 cells) for 24 h and 48 h treatment.