An analysis of the luminescence quenching of4F3/2level of Nd3+in YAG is presented in terms of two models: uniform random distribution and nonuniform placement of activators. It is shown that the correlated placement model for Nd3+ions, assuming the absence, based on ionic size arguments, of Nd3+ions in nearest‐neighbor sites, is in contradiction with high resolution absorption spectra as well as quantum yield data. The anomalous decay can be described by energy transfer theory for a uniform distribution with a short‐range interaction connecting the nearest‐neighbor pairs and with dipolar interaction inside the other donor‐acceptor pairs.