This study explores the deposition and photoluminescent properties of erbium-doped niobium pentoxide (Er: Nb2O5) films using magnetron co-sputtering, addressing critical challenges in integrated quantum photonics. We demonstrate that Er:Nb2O5 exhibits a prominent emission peak at 1531 nm with a full width at half maximum of 68 nm, indicating potential for high-capacity optical communication. Optimal annealing conditions at 700 degrees C for 5 min significantly enhance luminescence, resulting in over double the photoluminescence (PL) intensity compared to lower or higher temperatures. X-ray diffraction confirms the transformation from amorphous to crystalline states, impacting PL characteristics and indicating that optimal annealing balances erbium ion diffusion and crystallinity. Additionally, the incorporation of erbium leads to pronounced upconversion luminescence, with a peak at 540.8 nm, suggesting applications in bioimaging and displays. The study also reveals a color-tuning capability, with CIE coordinates shifting towards the yellow region as erbium concentration increases, indicating potential for tailored optical outputs. Surface roughness analysis shows that while Er doping increases roughness, activation reduces it to below 2.0 nm, meeting precision requirements for quantum optical applications.