Abstract Sol–gel technology-produced MgO:Cr3+ and MgO:Mn4+,Li+ nanocrystals (particle size ~5nm) were studied with laser spectroscopy techniques. The low-temperature fluorescence line narrowing (FLN) experiments were performed for the inhomogeneously broadened R-line of cubic Cr3+ centers. The observed spectra and their dependence on excitation wavelength are significantly different from that reported in literature for the bulk single crystals, and thus demonstrate specific inhomogeneous broadening mechanisms in nanocrystals. The nature of inhomogeneous broadening of spectral lines of impurity ions in nanocrystals is discussed. The site-selective spectroscopy of MgO:0.02%Mn,0.4%Li nanocrystals (Li added for charge compensation) showed that no lines in the emission spectra can be ascribed to Mn4+ centers with cubic symmetry.