The diversity and potentials of the aerosol route for making functional materials at the nano size level are reviewed. Among the methods currently used for nanophase processing, synthesis through dispersion phase (aerosol) enables generation of ultrafine, either single or complex powders with controlled stoichiometry, chemical and phase content provided by high surface reaction, high heating and cooling rates and short residence time. It represents a “bottom-up” chemical approach and provides control over a variety of important parameters for particle processing. This may favors to the formation of either amorphous, nanocrystalline or metastable phases implying a huge impact in the search for advanced functional materials having novel and unique structures and properties. Particularly, the opportunities of the hot wall aerosol synthesis, i.e. spray pyrolysis, for the generation of ultrafine spherical particles with uniformly distributed components, phases and nano-clustered inner structure and luminescence properties is demonstrated with various analyzing techniques like XRPD, FE-SEM, HR-TEM, STEM and nanotomography. Following the initial attempts, a more detailed aspect of the several phosphor particles generation based on Gd₂O₃:Eu, Y₂O₃:Eu, (Y_1-xGd_x)₂O₃:Eu and Y₃Al₅O₁₂:Ce is reviewed highlighting the research activities in the Institute of Technical Sciences of SASA, Serbia.