Multifunctional Eu:NaGdF4 nanospheres functionalized with polyacrylic acid (PAA) polymer have been prepared for the first time by a simple one-pot method that consists of a homogeneous precipitation reaction at 120 °C. The size of the nanospheres, which were polycrystalline and crystallized into a hexagonal structure, could be altered in the 60–95 nm range by adjusting the amount of polyacrylic acid added. The effects of Eu content and particle size of these nanomaterials on their optical properties (emission intensity and lifetime) as well as on their relaxivity (r1 and r2) values were also analyzed to find the optimum system for optical bioimaging and as a positive contrast agent for magnetic resonance imaging (MRI) applications. Finally, such optimum nanoparticles showed negligible cytotoxicity for Vero cells for concentrations up to 0.5 mg mL–1 and a high colloidal stability in 2-morpholinoethanesulfonic acid solutions, thereby satisfying the most important requirements for their use in biotechnological applications.