Terbium-doped cerium phosphate nanocrystals are successfully synthesized through microwave-assisted sol-gel method and are annealed at different temperatures for detailed investigation on structural and optical properties. The structural characterization carried out using X-ray diffraction analysis confirmed that all the samples are crystallized in monoclinic structure having chemical formula CePO4 and revealed the thermal stability of the synthesized samples. A novel theoretical model is proposed to investigate the influence of annealing temperature on Tb3+ by analyzing I-4/I-3-annealing temperature plot in which two regions are distinguished as above and below the crystallization temperature. A generalized equation derived in terms of rate constants for I-4/I-3 helps to frame four distinct cases describing the role of different radiative and nonradiative relaxations in the Tb3+ luminescence from D-5(3) and D-5(4) levels. The subsequent evaluation of each case described the role of defects, cross-relaxation and multiphonon relaxation in the variation of I-4/I-3 with annealing temperature and verified by the experimentally observed data with the help of TEM, FESEM, TGA and decay analysis.