We present the optical properties of rare earth (RE)-doped $\rm{Al_{2}O_{3}}$ thin films and discuss their possible use in applications like gate dielectric material and in coating industry. Aluminum oxide films doped with RE elements such as Ce, Nd, Gd, and Dy are synthesized on glass substrate using ultrasonic spray pyrolysis technique at 400$^{\circ}$C. The concentration of rare earth element is varied from 0.5 to 5 mol% in 0.1 M solution of $\rm{Al_{2}O_{3}}$. The X-ray diffraction analysis indicates that the thin films deposited with and without rare earth doping have an amorphous structure. Further, the optical properties of RE-doped $\rm{Al_{2}O_{3}}$ thin films are studied by using UV–visible spectroscopy and photoluminescence measurement. The band gap is found to be 4.06eV for $\rm{Al_[2}O_{3}}$ thin film. A small blue shift is seen in the optical spectra of RE-doped samples as compared to undoped $\rm{Al_[2}O_{3}}$ film. Dielectric constant of alumina thin film increases with doping of Gd and Dy while it decreases with Ce and Nd doping. Concentration quenching effects are observed in the photoluminescence spectra of Ce, Nd, Gd, and Dy-doped $\rm{Al_[2}O_{3}}$ films. Among all these RE-doped $\rm{Al_[2}O_{3}}$ thin films, Gd and Dy-doped $\rm{Al_[2}O_{3}}$ films exhibit a potential for the construction of dielectric gate in transistors or as a coating material in the semiconductor industry.