In recent research, the zinc oxide (ZnO) semiconductor nano particles have received a lot of attention due to its unique physical, chemical, magnetic and optoelectronic properties. The present study focuses on the photo physical and optoelectronic properties of ZnO nanostructures. To attain better optical and optoelectronic properties for light emitting diodes, solar cells and photo detectors, the rare earth transition metal ions, specifically gadolinium (Gd) were doped into ZnO nano material. Gadolinium-doped ZnO nano materials have been synthesized by a simple chemical deposition method. The structural, morphological, optical properties of synthesized samples have been investigated by various techniques, including x-ray diffraction (XRD), UV-absorption spectroscopy, and photo luminescence spectroscopy. X-ray diffraction analysis confirmed the formation of pure single phase with a particle size in the range of 30–42 nm. Optical absorption studies demonstrates that the absorption edge of the Gd:ZnO appeared to shift towards the longer wavelength due to the charge transfer between the ZnO valence or conduction band and rare earth ion 4f energy level. The band gap of the doped ZnO samples was found to be decreases and it varies from 3.2 eV to 3.1 eV due to the quantum confinement of the charge carriers in ZnO. These results provide a new approach to design ZnO nano particles with enhanced photochemical properties, light emitting electronics and solar cells.