Abstract In the swiftly advancing field of nanophotonics, mastering luminescence modulation in rare earth ion‐doped materials, particularly for next‐generation data storage systems, stands as a significant yet elusive goal. Innovatively tackling this challenge, the study explores the luminescent properties of Y 2 O 3 :Eu 3+ micro/nanocrystals coexisting with plasmonic nanostructures, aiming to crack the code of luminescence modulation via surface plasmonic thermal effects. A unique luminescence quenching phenomenon exceeding conventional thermal quenching mechanisms is unveiled, bestowing particles with an unprecedented ability to remember light intensity. Comprehensive analysis reveals that the optical power memory properties originate from tunable changes in absorption cross‐sections, enabling particles to maintain a consistent temperature across broad light intensity ranges. The erasure and re‐writing of remembered light intensity information are further investigated, proposing dual erasure modes: light‐assisted forward and annealing‐assisted reverse techniques, ensuring controlled manipulation of stored optical information. Leveraging the singular memory capability, composite films are crafted to encode decimal and binary data via luminescence imaging. Adjustable readout power enables visualization of decimal numbers through a 5 × 3 point matrix and precise optical info coding in an 8 × 4 matrix with ASCII. This breakthrough advances smart optical material design for potential use in advanced optics, sensing, and data storage.