Presently, effective utilization of hydroxy group for the photoluminescence of lanthanide-activated micro-/nano-phosphors remains a formidable challenge, since it usually reduces or even quenches emissions via the non-radiative depopulation of the excited state of lanthanide ions. Herein, we address this issue by investigating the dual role of hydroxy group for luminescence and water-dispersion of REF₃ (RE = Yb, Er, Tm) mesocrystals that are fabricated via an additive-free solvothermal route. These mesocrystals can be easily dispersed in water, producing a stable colloidal solution. Due to the presence of high energy –OH group on the surface, Er³⁺ doped YbF₃ mesocrystals exhibited NIR-to-NIR down-conversion luminescence but no NIR-to-visible upconversion emission upon irradiation of 980 nm, suggesting that these mesocrystals can be used as telecommunication optical materials or fluorescent labels.