Yb3+-doped inorganic materials are constantly in demand due to a strong interest in fundamental and applied research. The simplicity of the 4f1³ electronic structure minimizes de-excitation processes and enables a quasi-three-level laser emission scheme at 1 μm employed for IR laser devices. In this work, we present an unusual simultaneous emission from two of the lowest levels of the 2F5/2 excited state observed at 77 K, measured for the first time and confirmed by the barycenter law for Yb3+-doped tetragonal LuPO4 revealing the lowest crystal field among Yb3+ ion-activated oxide crystals. Three series of tetragonal lutetium orthophosphate powders, containing various concentrations of Yb3+ ions (0.5–5 mol %), were analyzed in nano and micro-crystalline forms. The ionic liquid-assisted (IL) hydrothermal (HT) method was used for the nano-powders' preparation. This route enabled the fabrication of fine nano-powders with particle sizes of 15 nm in an ethylene glycol (GE) reaction medium and 30 nm in a water (W) medium, each exhibiting the desired well-crystallized single-phase phosphate. For comparative studies, the micro-crystalline samples were synthesized via reaction in the solid phase at a relatively high temperature. The Yb3+ ion also served as a structural probe, its spectroscopy i.e., absorption at 4.2 K, selectively excited luminescence at 77 K, and fluorescence decays were used to assign Yb3+ energy levels in only one D2d center precisely. This assignment was based on exceptional features due to the unique emissions observed from the two lowest levels of the 2F5/2 excited state, split only by 27 cm−1, confirmed by calculation of the crystal field parameters from Zeeman spectra.