We report here the processing and properties of transparent glass and glass-ceramic nanocomposites in the Li2O-Ta2O5-SiO2-Al2O3 system in the presence of Eu2O3 as luminescent probe. The formation of the LiTaO3 crystal phase, the crystallite size, and the morphology with the progression of heat treatment have been examined by X-ray diffraction (XRD), transmission electron microscopy (TEM), and Fourier transformed infrared reflectance spectroscopy measurements. The crystallite sizes obtained from XRD and TEM are found to increase with heat-treatment time and vary in the range of 2-20 nm. The measured photoluminescence spectra exhibit emission transitions of D-5(0,1)-> F-7(j) (j=0, 1, 2, 3, and 4) of Eu3+ ions. From the nature of the emission transitions, the site symmetry in the vicinity of Eu3+ ions has been found to be near C-3v in the glass-ceramic nanocomposites. An inverse correlation has been observed between the asymmetric ratio (I-ED/I-MD) of Eu3+ ions and the dielectric constant (epsilon(r)), with an increase in the heat-treatment time of glass, which is caused by the dipole-dipole interaction.