In computer simulations the mechanisms that lead to room‐temperature continuous‐wave green upconversion lasing in Er3+:LiYF4are investigated. The rate‐equation system considers the full erbium level scheme up to2H9/2, ground‐state depletion, excited‐state absorption on the pump and laser wavelengths, three interionic processes, stimulated emission, and the crystal and resonator data of the experiments. Experimental results performed at the University of Hamburg, Germany, are reproduced in the simulation. The influence of different parameters as pump wavelength, absorption cross sections, interionic parameters, dopant concentration, and temperature is investigated. An avalanche effect which exploits the strong cross relaxation from the upper laser level and the upconversion from4I13/2leads to an efficient population of the upper laser level. At higher dopant concentrations the cross relaxation becomes detrimental to stimulated emission due to the depletion of the upper laser level. This concentration dependence can be considered as a general behavior of rare‐earth‐doped avalanche lasers. ©1995 American Institute of Physics.