The mineral gadolinite ((Ce, La, Nd, Y)₂FeBe₂Si₂O₁₀), discovered in a quarry near the town of Ytterby, Sweden, has been the source of a great number of rare earth elements. In 1843, Carl Gustaf Mosander, a Swedish chemist, was able to separate gadolinite into three materials, which he named yttria, erbia and terbia. As might be expected considering the similarities between their names and properties, scientists soon confused erbia and terbia and, by 1877, had reversed their names. What Mosander called erbia is now called terbia and visa versa. From these two substances, Mosander discovered two new elements, terbium and erbium. Today, erbium is primarily obtained through an ion exchange process from the minerals xenotime (YPO₄) and euxenite ((Y, Ca, Er, La, Ce, U, Th)(Nb, Ta, Ti)₂O₆).

Erbium is alloyed with vanadium to make it softer and easier to shape. Erbium is added to fiber optic cables as a doping agent where it is used as a signal amplifier. Erbium also has some uses in the nuclear power industry.

Erbia, the renamed material that Mosander discovered in 1843, is erbium oxide (Er₂O₃), one of erbium's compounds. Erbia has a pink color and is used to color glass and glazes. Other erbium compounds include: erbium fluoride (ErF₃, erbium chloride (ErCl₃ and erbium iodide (ErI₃).