A series of crystalline powder samples of K2YF5:1.0%Nd3+, x%Yb3+ (x = 0, 2.0, 5.0 and 8.0) were prepared by hydrothermal synthesis method. The excitation and emission spectra and luminescence decay curves were studied. The decay time of Nd3+ D-4(3/2) and P-2(3/2) independence on Yb3+ concentration illustrates the absence of direct cross relaxation energy transfer from these two states to Yb3+ in K2YF5. However, the shortening of rising time of Nd3+ F-4(3/2) luminescence with Yb3+ concentration reveals the existence of cross relaxation energy transfer from Nd3+ to Yb3+ the potential energy transfer process from Nd3+ ((4)G(9/2) -> F-4(3/2)) to Yb3+ (F-2(7/2) -> F-2(5/2)) has been proposed. Furthermore, the second step energy transfer from Nd3+ (F-4(3/2) -> I-4(9/2)) to Yb3+ (F-2(7/2) -> F-2(5/2)) has been verified and the transfer efficiency of 89% from Nd3+ F-4(3/2) state to Yb3+ has been obtained in K(2)YF5:1.0%Nd3+, 8.0%Yb3+. The mechanism responsible for the efficient energy transfer is electric dipole-dipole interaction.