We show that quenching of the Nd fluorescence is in principle not associated with the Nd3+ ion but with the host. The process is due to near-field electric dipole interaction between Nd pairs, and cross relaxation via the4I1 5/2 manifold. We present for the first time the complete fluorescence spectrum and level scheme of Nd∶YAG, and find that Nd∶YAG has an exceptional level configuration which boosts cross relaxation. Our results encourage the search for new Nd laser materials which have a slightly different position of the4I1 5/2 manifold so that higher Nd concentrations can be achieved for integrated-optics applications. Finally, we report on implications of energy migration which we found to be quite effective in Nd∶YAG.