We report here a novel synthetic route for the preparation of well-defined and faceted nanocrystals of ternary rare earth oxychlorides based on the ligand exchange and condensation of rare earth halides and alkoxides in the presence of coordinating solvents. Nanocubes, faceted 2D nanosheets, and nanodisk morphologies are obtained as a result of preferential growth along specific crystallographic directions dictated by the choice of the rare earth ion and the capping ligand. The synthetic approach reported here represents a unique low-temperature route for the preparation of LnOCl in the PbFCl matlockite phase. The synthetic strategy can further be adapted to incorporate dopant ions. The potential applicability of these nanostructures as phosphors is illustrated by demonstrating the upconversion of near-infrared illumination to green and red emission by Er3+:GdOCl nanocrystals.