Zn.96−xY.04CuxO (x=0, 0.05, 0.10 and 0.15) nanoparticles were successfully synthesized employing simple sol–gel method. Hexagonal wurtzite structure of the synthesized samples was not affected by Cu-doping. CuO phase was induced after Cu=5% and it was increased by Cu-doping. The change in crystal size was discussed based on compressive stress, lattice volume and bond length. The chemical stoichiometry of Zn, Cu, Y and O was confirmed by energy dispersive X-ray spectra. The increased oxygen percentage from 57.88 (Cu=5%) to 64.53% (Cu=15%) by Cu-doping proved the existence of CuO and oxygen rich phase. The lower absorption and high transmittance in visible region observed at Cu=5% described the good optical quality of the sample with low scattering or absorption losses which leads to the industrial applications especially as transparent electrode. The high energy gap at Cu=5% could be attributed to the poor crystallinity of the sample. The red shift in energy gap after Cu=5% was explained by the p–d spin-exchange interactions between the band electrons and the localized d electrons of Cu2+ ions. The change in intensity and peak position of infrared (IR) peaks confirmed the presence of Cu in ZnYO lattice and also expressed the perturbation generated by Cu in ZnYO lattice.