Y2O3 and Gd2O3 upconversion nanoparticles (UCN) co-doped with Yb3+ and Er3+ can absorb and upconvert near infrared (NIR) radiation into visible light. These UCN find application in bioimaging, as an important tool to diagnose and visualize cancer cells. The UCN can be used as biolabels to identify the cells; the nanoparticles can be coated and functionalized with ligands that bind to receptors on the surface of the cell. In this project, the UCN were synthesized by sol-gel method and subsequently coated with a thin silica shell by using the Stöber method. The core-shell UCN were functionalized with amine group to enable folic acid conjugation. The functionalized core-shell nanoparticles were analyzed by transmission electron microscopy (TEM), Fourier transform infrared spectroscopy (FTIR), and luminescence measurements. Concentrations of bare and coated/functionalized UCN between 0.001 µg/mL and 1 µg/mL were tested on two different cell lines from human cervix carcinoma (HeLa) and human colorectal adenocarcinoma (DLD-)1 with colorimetric assay based on the MTT reagent (methy-134 thiazolyltetrazolium). The results show good luminescence spectra on all core-shell UCN. The MTT assays show that some concentrations of bare UCN of Y2O3: Er, Yb (1%, 1% mol) and Gd2O3 were cytotoxic for cervical adenocarcinoma cells (HeLa). For human colorectal adenocarcinoma all UCN are non-cytotoxic. The UCN with silica-aminosilane functionalization (APTS/TEOS) were non-cytotoxic on both cell lines.