ZnO nanoparticles were synthesized successfully by solgel-combution route at room temperature. X-ray diffraction (XRD) and UV-Visible spectroscopy were used to investigate the effect of annealing temperature on the structural and optical properties of ZnO nanoparticles. XRD study estimated that prepared samples had a hexagonal wurtzite structure and crystallite size 4.22 nm and 5.68 nm for ZnO nanoparticles without annealing and annealed at 6000C temperature, formation of quantum dots observed. Optical study revealed the blue shift in energy band gap. Investigation of chemical groups and chemical bonding was completed by FTIR technique.