Bifunctional Eu(BMDM)(3)@polysiloxane nanoparticles were prepared through reprecipitation -encapsulation methods using 1-(4-tert-butylphenyl)-3-(4-methoxyphenyl)-1,3-propanedione (BMDM) ligand and octyltrimethoxysilane (OTS) precursor and embedded into waterborne polyurethane (PU) coatings to fabricate transparent optical composite films. The photostability and thermostability of the nanoparticles in water and their ability to block UV and convert light when embedded in PU films were investigated. In comparison with the control Eu(BMDM)(3) nanoparticles, the Eu(BMDM)(3)@polysiloxane nanoparticles, especially those prepared at a Eu(BMDM)(3)/OTS mole ratio of 1:2, exhibited far superior stability under storage conditions, UV irradiation, and heating. They also showed excellent UV-shielding and highly efficient light conversion properties because of the protective polysiloxane. (C) 2012 Elsevier B.V. All rights reserved.