Higher doping of Er3+ in glass ceramic waveguides would cause concentration and pair‐induced quenching which lead to inhomogeneous line‐width of luminescence spectrum thus reduce output intensity. Concentration quenching can be overcome by introducing ZrO2 in the glass matrix while co‐doping with Yb3+ which acts as sensitizer would improve the excitation efficiency of Er3+. In this study, SiO2‐ZrO2 planar waveguides having composition in mol percent of 70SiO2‐30ZrO2 doped with Er3+ and co‐doped with Yb3+, were prepared via sol‐gel route. Narrower and shaper peaks of PL and XRD shows the formation of nanocrystals. Intensity is increase with addition amount of Yb3+ shows sensitizing effect on Er3+.