A thorough spectroscopic examination of the co-doped Yb:Ho:YSGG system was performed with the goal of achieving cw laser action on the 3 mum Ho 5I6 --> 5I7 transition. Yb has very good pump absorption properties, and a highly efficient process transfers the excitation to the Ho upper laser level, which has a lifetime of approximately 400 mu sec. The lower laser level lifetime can be reduced from 9 msec to 1.5 msec by the addition of 2% Eu as a deactivator without adversely affecting the upper laser level population. An undesirable upconversion process was discovered, though its effect can be minimised using high Yb and Ho concentrations, as these make the energy transfer rate so fast that it dominates the upconversion rate. The ideal composition derived from our studies is 50% Yb: 8% Ho:2% Eu, and laser operation at duty cycles in excess of 0.25 appears possible.