Erbium-doped nanocrystal (NC)-dispersed polymer thin films are attractive core materials for use in optical waveguides as they can provide high optical gain and enable the formation of compact waveguide amplifiers. Nonetheless, there are significant challenges associated with obtaining good dispersibility of NCs into a polymer matrix and favorable optical properties. Therefore, in this paper, we report the fabrication of Er3+-doped ceria (EGC) NCs employing the Leeds alginate process (LAP) and their incorporation into a siloxane polymer matrix. The surface morphology and compositional, structural, and optical properties of the fabricated films are evaluated to assess the NC dispersion and their suitability for the waveguide amplifier. The photoluminescence (PL) and lifetime measurements of the NCs-polymer nanocomposite thin film samples show intense, broadband PL emission of the Er3+ ions at 1534 nm (4I13/2 → 4I15/3 transition) with a full width at half-maximum (fwhm) of ∼64 nm and lifetime in the range of 2.6-3.0 ms. The inhomogeneously broadened PL spectra and improvement in lifetime of NCs in the polymer are important results that we report. The EGC NCs-polymer nanocomposite thin films also exhibit excellent transparency in the NIR wavelength range and a refractive index in the range of 1.53-1.58 in the visible wavelength. The work presented here clearly demonstrates the potential of using high-quality Er-doped nanocomposite polymer thin films for interesting applications such as compact low-cost waveguide amplifiers and lasers.