This work demonstrates an efficient and bio-friendly fluorescence resonance energy transfer (FRET) system based on lanthanide-doped inorganic nanoparticles. A facile aqueous route was used to synthesize the CePO(4):Tb nanorods with homogeneous colloidal dispersion, which emits a bright green light with a high quantum yield (∼0.36) and a long fluorescence lifetime (∼3.50 ms) upon UV excitation. Upon treatment of CePO(4):Tb with aqueous Rhodamine B (RhB), an efficient FRET occurs from the Tb(3+) to the RhB molecules, giving rise to well resolved and ratiometric emissions of donors and acceptors, respectively, with an energy transfer efficiency of up to 0.85. When incubated with HeLa cells at 37 °C, the CePO(4):Tb treated with RhB shows bright intracellular luminescence, indicating that it can be successfully internalized inside the cells and the FRET remains in the living cells. Moreover, the cytotoxic measurements demonstrate good biocompatibility and low cytotoxicity of our present FRET system. The advantages presented above including high quantum yield of donors, high energy transfer efficiency, ratiometric fluorescent emission and good biocompatibility, indicate the high potential of the CePO(4):Tb/RhB FRET system for monitoring biological events.