KYF₄ polycrystalline materials singly doped with Sm³⁺ ions and co-doped with Tb³⁺/Sm³⁺ ions were synthesized by the hydrothermal technique. The optical spectra of all samples were measured at room temperature. The features of the ligand field and the optical properties of Sm³⁺ ions in KYF₄ were studied via Judd–Ofelt theory. A three-level model was used to estimate the validity of the Judd–Ofelt analysis for KYF₄:Sm³⁺. The luminescence quenching of KYF₄:Sm³⁺ relates to energy transfer through cross relaxation between Sm³⁺ ions. For KYF₄:Tb³⁺,Sm³⁺, the luminescence of Sm³⁺ ions is enhanced due to the energy transfer process from Tb³⁺ to Sm³⁺. The chromaticity features of the luminescence from KYF₄:Tb³⁺,Sm³⁺ were estimated by the chromaticity coordinates and correlated color temperature (CCT). The dominant interaction mechanism and the energy transfer parameters for the Sm³⁺–Sm³⁺ and Tb³⁺–Sm³⁺ energy transfer processes were analyzed by using the Inokuti–Hirayama model.