Rare-earth (RE) doped materials with unique 4f electronic structures show special optical phenomena at the macro- and microscale, which are commonly studied through laser-mediated experiments. Recently, RE doped nanocrystals have been intensively studied for various applications, including bioimaging, biolabeling, photodynamic therapy, catalysis, solar cells, color displays, light emitting diodes, low-threshold lasers, high temperature sensors, and many others. For the last five years in the Pauzauskie lab, I have been focusing on developing new methods for synthesizing and characterizing engineered micro- and nano-scale RE-doped nanocrystals for investigating the interaction of light with condensed matter, especially laser cooling through anti-Stokes fluorescence. The main method utilized for laser cooling in the Pauzauskie lab is optical trapping with laser tweezers. A brief introduction to laser cooling and optical trapping is included in Chapter 1 of this thesis. The remaining chapters describe the development and characterization of different phases of RE doped nanocrystals which can be optically trapped for nanoscale laser cooling and thermometry with laser tweezers. In Chapter 2, different methods of synthesizing fluoride nanocrystals are introduced and compared based on the requirements for the nanocrystals. A low-cost, scalable, and environmentally friendly hydrothermal method has been specifically introduced for fabricating both LiYF4 (YLF) and NaYF4 nanostructures. Due to the hermetic conditions inherent to hydrothermal synthesis, the growth mechanism of RE doped fluoride nanocrystals is unclear. Chapter 3 presents a systematic study on the synthetic mechanism of hydrothermal synthesis of sodium yttrium fluoride nanocrystals. Various cutting edge techniques, including ’in-situ’ TEM, EDS, XANES, EXAFS, and APT, are used to investigate the fundamental properties and growth mechanisms of RE doped fluoride nanocrystals in both Chapter 2 and 3. Chapter 4 describes the first experimental demonstration of laser cooling of Yb3+ doped YLF nanocrystals in aqueous media, which is explained by anti-Stokes fluorescence. The Yb3+ ions inside the crystal absorb laser photons and emit a mean higher energy fluorescence to extract heat from the crystal lattice. This unprecedented laser cooling in a condensed phase is achieved through home-built laser tweezers with a temperature extraction technique based on cold Brownian motion analysis. Furthermore, crystals of NaYF4, predicted to be a good host structure for laser cooling, are also experimentally proven for laser cooling in aqueous medium for the first time. The ability to optically generate local refrigeration fields around individual nanocrystals promises to enable precise optical temperature control within integrated electronic/photonic/microfluidic circuits, as well as thermal modulation of basic biomolecular processes. In Chapter 5, nanoscale thermometry of RE doped fluoride nanocrystals using spectroscopy methods has been applied on both single nanocrystals and ensembles of nanocrystals. The radiative relaxation rate of a single nanocrystal is studied with varying the local density of states of emitting dipoles through tuning the distance between the optically trapped nanocrystal and a nearby dielectric substrate. Lifetime thermometry is developed through a low-cost and compact avalanche photodiode with live data extraction and processing in LabVIEW, which can accurately and quickly probe the local temperature. In addition, optical trapping of individual nanocrystals with laser tweezers can provide precise temperature sensing at different locations in the nanoscale. Chapter 6 presents a summary of the thesis, along with a short discussion of future research directions for laser cooling of nanocrystals.