ZnGa₂O₄ nanoparticles doped with lanthanide ions (Tb³⁺ and Eu³⁺) were prepared at a low temperature of 120^oC based on urea hydrolysis in ethylene glycol medium. X-ray diffraction studies have confirmed that strain associated with nanoparticles changes as Tb³⁺ gets incorporated in the ZnGa₂O₄ lattice. Based on steady state emission and excitation studies of ZnGa₂O₄:Tb nanoparticles, it has been inferred that ZnGa₂O₄ host is characterized by a broad emission around 427 nm and there exists energy transfer between the host and Tb³⁺ ions. Unlike this, for ZnGa₂O₄:Eu nanoparticles, very poor energy transfer between the host and Eu³⁺ ions is observed. These nanoparticles when coated with ligands like oleic acid results in their improved dispersion in organic solvents like chloroform and dichloromethane.