Abstract: Photoluminescent temperature sensors based on gadolinium orthovanadate (GdVO4) doped with 10% ytterbium and 2% erbium are developed and dispersed in different media (lubricant fluid, sol–gel glass, and PDMS) to evaluate the best conditions for temperature measurement. Two excitation modes are considered: (i) visible excitation by a downshifting (DS) process or (ii) NIR excitation by energy transfer upconversion (UC) between Yb and Er. The luminescence intensity ratio (LIR) of the thermally coupled Er3+ emission peaks varies linearly with temperature in the range of 25–300 °C, and this variation is reversible. The impact of the laser power density on thermometry via the UC process that has been verified with GdVO4: Yb3+/Er3+ powders and with its different dilutions (low and high concentration) shows that the LIR is highly dependent on the laser source intensity, the environmental temperature, and the dispersed medium. When GdVO4: Yb3+/Er3+ powders are dispersed at high concentration, high laser power density leads to significant laser-induced thermal heating. However, at low concentration, this laser thermal effect is no longer influenced by the laser intensity. In this paper, we propose a method to directly measure the laser-induced heating temperature and to correct the error caused by this effect on temperature measurement. According to these results, GdVO4: Yb3+/Er3+ upconversion nanoparticles can be applied for temperature sensing even if the laser-induced thermal effect occurs in the system.