Multifunctional nanoparticles exhibiting red or green luminescence properties and magnetism were synthesized and thoroughly analyzed. The hydrothermal method was used for the synthesis of Eu- or Tb-doped GdF-, NaGdF-, and BaGdF-based nanocrystalline materials. The X-ray diffraction patterns of the samples confirmed the desired compositions of the materials. Transmission electron microscope images revealed the different morphologies of the products, including the nanocrystal sizes, which varied from 12 nm in the case of BaGdF-based nanoparticles to larger structures with dimensions exceeding 300 nm. All of the samples presented luminescence under ultraviolet irradiation, as well as when the samples were in the form of water colloids. The highest luminescence was observed for BaGdF-based materials. The obtained nanoparticles exhibited paramagnetism along with probable evidence of superparamagnetic behavior at low temperatures. The particles' magnetic characteristics were also preserved for samples in the form of a suspension in distilled water. The cytotoxicity studies against the human erythrocytes indicated that the synthesized nanoparticles are non-toxic because they did not cause the red blood cells shape changes nor did they alter their membrane structure and permeabilization.