To modify the luminescence properties of Ce³⁺-doped Y₃Al₅O₁₂ (YAG) phosphors, they have been coated with a carbon layer by chemical vapor deposition and subsequently heat-treated at high temperature under N₂ atmosphere. Luminescence of the carbon coated YAG:Ce³⁺ phosphors has been investigated as a function of heat-treatment at 1500 and 1650 °C. The 540 nm emission intensity of C@YAG:Ce³⁺ is the highest when heated at 1650 °C, while a blue emission at 400-420 nm is observed when heated at 1500 °C but not at 1650 °C. It is verified by X-ray diffraction (XRD) that the intriguing luminescence changes are induced by the formation of new phases in C@YAG:Ce³⁺-1500 °C, which disappear in C@YAG:Ce³⁺-1650 °C. In order to understand the mechanisms responsible for the enhancement of YAG:Ce³⁺ emission and the presence of the blue emission observed for C@YAG:Ce³⁺ -1500 °C, the samples have been investigated by a combination of several electron microscopy techniques, such as HRTEM, SEM-CL, and SEM-EDS. This local and cross-sectional analysis clearly reveals a gradual transformation of phase and morphology in heated C@YAG:Ce³⁺ phosphors, which is related to a reaction between C and YAG:Ce³⁺ in N₂ atmosphere. Through reaction between the carbon layer and YAG host materials, the emission colour of the phosphors can be modified from yellow, white, and then back to yellow under UV excitation as a function of heat-treatment in N₂ atmosphere.