Er3+-doped materials have attracted great attention. In this study, the effects of the kind of alkali (Li, Na, and K), Er2O3 concentration (up to 3 mol%), and P2O5 addition (0 and 2 mol%) on the phase separation, optical absorption, and photoluminescence (PL) of the alkali borosilicate glasses were investigated. The relationship between microstructure and optical properties of the glasses is discussed. It was found that the development of the droplet phase enhances both the light-scattering effect (enhancing the PL intensity) and the concentration-quenching effect (reducing the PL intensity). As a result, the variation of the PL intensity of the Er3+ 4I(13/2)-> 4I(15/2) transition with Er2O3 content is mainly caused by the conflict between the light-scattering effect and the concentration-quenching effect. The 1 mol% Er2O3-doped, P2O5-containing, sodium borosilicate glass has the optimum microstructure and thus the highest PL intensity.