Lanthanide‐activated solid‐state lasers, scintillators, and lamps reflect the ability of the lanthanide ions to absorb, transfer, exchange, and emit light under the influence of the host crystal, which deforms and multiplies the lanthanide's atomic electronic states in various ways and extents, until local electronic states arise in the imperfect crystal, which are rooted in the lanthanide and capable of administering a variety of energy‐related processes. This chapter discusses the embedded‐cluster method, particularly useful in ionic materials. The lanthanide 4f, 5d, and 6s shells must be included in the active space for the calculation of the 4f N, 4f N‐15d, and 4f N‐16s manifolds, N being the number of active electrons. The rich manifolds of excited states of the lanthanide ions in solids makes them suitable for a large variety of technological applications ranging from lasers and color displays to solar‐cells and scintillators.