The pressure-induced phase transition of cubic Eu2O3 was systematically investigated using in situ Raman and photoluminescence spectroscopy up to 25.7 GPa. Our results demonstrate that the cubic-to-hexagonal phase transition in Eu2O3 occurs at 7.5 GPa, as evidenced by pressure-dependent Raman spectra. The calculated Grüneisen parameters for the vibrational modes in both the cubic and hexagonal phases of Eu2O3 revealed a significant decrease during the cubic-to-hexagonal phase transition, implying a potential enhancement in thermal conductivity. The significant change in the luminescence intensity ratio between the 5D0 → 7F2 and 5D0 → 7F1 transitions under increasing pressure confirmed the phase transition in Eu2O3, as corroborated by high-pressure Raman spectroscopy. The observed red shift in the emission is attributed to the expansion of the Eu3+ f-orbital, whereas the variation in the intensity ratio originates from symmetry distortions in the crystal field under compression. Upon decompression, the material adopted a metastable monoclinic phase, which is indicative of an irreversible phase transition. This metastable monoclinic polymorph of Eu2O3 at ambient pressure holds potential for applications in high-precision optical coatings, wavelength-selective filters, and next-generation solid-state laser systems. Our results established that pressure-mediated structural and photoluminescence tailoring can activate unprecedented optical functionalities in Eu2O3, thereby enabling tailored optoelectronic device engineering.