Monoclinic ZrO₂ (m-ZrO₂) is an attractive material for photonic applications due to its low site symmetry and phonon energy. In this paper, we present detailed studies on the luminescence properties of Ti⁴⁺ and Eu³⁺ in m-ZrO₂. In view of the continuing controversy over the origin of “intrinsic” white-blue luminescence in pristine m-ZrO₂, more spectroscopic information obtained by characterizing m-ZrO₂ intentionally doped with Ti⁴⁺, Ti³⁺ and other metal ions and extensive discussions on the general characteristics of different luminescence processes were provided to evidence the luminescence as the Ti³⁺ → O⁻ charge transfer transition in the [Ti(IV)O₇]¹⁰⁻ complex due to the trace amount of Ti⁴⁺ impurity in ZrO₂ reagent. Competitive absorption was observed between host exciton and oxygen–metal charge transfer processes (O²⁻–Ti⁴⁺, O²⁻–Eu³⁺), and even between the two types of charge transfer process because of the sharing of electrons at the top of the valence band, which greatly influenced the absorption and excitation processes. The spectral components comprising the broad excitation band of O²⁻–Ti⁴⁺ white-blue or Eu³⁺ red emissions in different phosphors were identified, and their evolutions with doping concentration were explained. The energy state locations of oxygen defects produced by intrinsic charge compensation in m-ZrO₂:Eu³⁺ were proposed to be ∼2.41 eV above the top of the valence band by using Eu³⁺ for the luminescent probe. Efficient energy transfer from the [Ti(IV)O₇]¹⁰⁻ complex to Eu³⁺ was first observed in m-ZrO₂:Ti⁴⁺,Eu³⁺ phosphors, which were demonstrated to be high performance ratiometric self-referencing optical thermometric materials based on the dual-emitting combination strategy, with the relative sensitivity amounting to ∼3.84% K⁻¹. Optical thermometry not only covering the physiological temperature range but also with high relative sensitivity could be achieved upon appropriate doping.