Over the past decade, high-quality upconversion phosphors have been synthesized and investigated with the rapid development of nanotechnology. The upconversion materials can efficiently convert near-infrared light into visible or ultra-visible luminescence using a stepwise multiphoton process which make these materials ideal candidates for various applications such as lasers, solar cells, sensors, security inks, and optical imaging. Upconversion can take place in both organic and inorganic materials through a number of different processes. It usually takes place in polycyclic aromatic hydrocarbons (PAHs) in organic matter and in d or f-block elements in inorganic materials. Nowadays lanthanide–doped upconversion materials are proved to be more promising owing to wide range applications in solid state lighting and solar cells. Upconversion materials can efficiently convert sub-band gap photons into above band gap-light in solar cells has led to vast research in upconversion materials and its applications in the energy field. The efficiency of upconversion materials can be elevated through the optimization of the following factors: added impurity, absorption, energy transfer, and emission. The appropriate knowledge of basic principles and mechanism involved in upconversion can lead to novel approaches in enhancing the upconversion luminescence. The proposed chapter thoroughly discusses and focused on the mechanism of upconversion and its differentiation from analogous processes such as simple harmonic generation and two-photon absorption. Various processes possible for upconversion in materials such as energy transfer upconversion (ETU), excited-state absorption (ESA) and photon avalanche (PA) etc. are explained with necessary conditions in detail. This chapter provide the readers an insight to realize how emission energy is high than excitation energy while following the law of conservation of energy. In addition, the chapter elaborates the structure and function of upconversion materials. The efficiency of the upconversion process, fundamental physics involved and atomic level details behind the upconversion process is also discussed. The reported research works in the field over the years are reviewed while simultaneously bringing to the forefront the future scope of the field. The chapter finally summarizes with the limitations, challenges in improving the upconversion luminescence in materials and possible ways to overcome.