Nanocomposite ZnO–Ag thin film containing nano-sized Ag particles have been grown on glass substrate by spin-coating technique using zinc acetate dihydrate as starting precursor in 2-propanol as solvent and monoethanolamine as stabilizer. Silver nanoparticles were added in the ZnO sol using silver nitrate dissolved in ethanol-acetonitrile. Their structural, electrical, crystalline size and optical properties were investigated as a function of preheating, annealing temperature and silver content. The results indicated that the crystalline phase was increased with increase of annealing temperature up to 550 °C at optimum preheating temperature of 275 °C. Thermal gravimetric differential thermal analysis results indicated that the decomposition of pure ZnO and nanocomposite ZnO–Ag precursors occurred at 225 and 234 °C, respectively with formation of ZnO wurtzite crystals. The scanning electron microscopy and atomic force microscopy revealed that the surface structure (the porosity and grain size) of the ZnO–Ag thin film (the film thickness is about 379 nm) was changed compared to pure ZnO thin film. The result of transmission electron microscopy showed that Ag particles were about 5 nm and ZnO particles 58 nm with uniform silver nanoclusters. Optical absorption results indicated that optical absorption of ZnO–Ag thin films decreased with increase of annealing temperature. Nanocomposite ZnO–Ag thin films with [Ag] = 0.068 M and [Ag] = 0.110 M showed an intense absorption band, whose maximum signals appear at 430 nm which is not present in pure ZnO thin films. The result of X-ray photoelectron spectroscopy revealed that the binding energy of Ag 3d5/2 for ZnO–Ag shifts remarkably to the lower binding energy compared to the pure metallic Ag due to the interaction between Ag and ZnO.