Rare earth-activated phosphors demonstrate significant application potential across various fields, including lighting, displays, anti-counterfeiting, and optical thermometry measurement. This study focuses on the development of multifunctional optical materials for lighting and temperature sensing through the synthesis of a series of Dy³⁺-doped Ca₇NaY(PO₄)₆ phosphors via high-temperature solid-state reaction. The phase purity and morphological characteristics of the obtained samples were confirmed by X-ray diffraction and scanning electron microscopy. Luminescence properties and energy transfer mechanisms were systematically investigated through photoluminescence spectroscopy and fluorescence decay analysis. Under 350 nm near-ultraviolet excitation, the emission intensity of Ca₇NaY(PO₄)₆: Dy³⁺ increases with rising Dy³⁺ concentration until reaching an optimal value at x = 0.07, beyond which concentration quenching occurs. This quenching behavior is attributed to enhanced non-radiative energy transfer at higher Dy³⁺ concentrations, leading to a corresponding decrease in fluorescence lifetime. The optimized Ca₇NaY(PO₄)₆: 0.07Dy³⁺ phosphor displays remarkable thermal stability, retaining 86.9% of its initial emission intensity at 150 ℃. The white LED device fabricated using the obtained phosphor and near-UV LED chip shows excellent performance with a correlated color temperature of 5680 K, CIE coordinates of (0.3275, 0.3883) in the white light region and a color rendering index of 85. Furthermore, temperature-dependent fluorescence intensity ratio analysis reveals excellent optical thermometric performance, achieving a maximum relative sensitivity (S_r) of 1.72% K^-1. These results indicate that the Ca₇NaY(PO₄)₆: Dy³⁺ phosphor exhibits significant potential for application in single-matrix phosphor-converted white LEDs and high-precision optical optical thermometry.