Sputter-deposited thin-film amorphous AlN:Er (1 at. %) emits at 554 and 561 nm as a result of 2S3/2 → 4I 15/2 and 4S3/2 → 4I 15/2 transitions. AlN:Yb (1 at. %) gives a weak emission peak at 966 nm as a result of 2F5/2 → 2F 7/2. The codoping of Er and Yb in AlN results in energy transfer from Er+3 to Yb+3 and enhances the Yb+3 emissions by an order of magnitude. Transfer of electrons occurs from the 4S3/2 state of Er+3 to the 2F 5/2 state of Yb+3. The weak emission from Yb+3, when excited by a 532 nm laser in the absence of Er+3, confirms that the luminescence enhancement in ytterbium is due to energy transfer and not to direct green light excitation by the erbium emission. A possibility of population inversion and a four-level laser cavity formation exists in the Er+3-Yb+3 system. © 2010 Optical Society of America.