Exciton-polaron formation in GaGdN/AlGaN multiquantum wells was inferred from the lower energy of the photoluminescence peak observed for the GaGdN quantum wells (QWs) compared with GaN QWs. The rather low value of the excitonic transition energy is attributed to exciton-polarons bound to the Gd ions. Exciton-polarons are most likely to occur due to the lattice distortion around the substituted Gd ions in addition to the exchange interaction between Gd3+ magnetic ions and the strongly confined charge carrier spins in GaGdN QWs. The mechanism of exciton-polaron formation is discussed. The magnetic behavior is briefly presented.