Upconversion nanoparticles (UCNPs) have been frequently applied in Förster resonance energy transfer (FRET) bioanalysis. However, the understanding of how surface coatings, bioconjugation, and dye-surface distance influence FRET biosensing performance has not significantly advanced. Here, we investigated UCNP-to-dye FRET DNA-hybridization assays in H₂O and D₂O using ∼24 nm large NaYF₄:Yb³⁺,Er³⁺ UCNPs coated with thin layers of silica (SiO₂) or poly(acrylic acid) (PAA). FRET resulted in strong distance-dependent PL intensity changes. However, the PL decay times were not significantly altered because of continuous Yb³⁺-to-Er³⁺ energy migration during Er³⁺-to-dye FRET. Direct bioconjugation of DNA to the thin PAA coating combined with the closest possible dye-surface distance resulted in optimal FRET performance with minor influence from competitive quenching by H₂O. The better comprehension of UCNP-to-dye FRET was successfully translated into a microRNA (miR-20a) FRET assay with a limit of detection of 100 fmol in a 80 μL sample volume.