Effects of Fe doping on the structural, photoluminescence and optical properties of sol–gel derived Zn100−xFexO (0 ≤ x ≤ 5) nanoparticles have been investigated. X-ray diffraction and HRTEM studies reveal a single phase wurtzite crystal structure without any secondary phase. The nanocrystalline nature of samples and their crystallinity have been confirmed by transmission electron microscopy measurements. Raman spectroscopy has been employed to study the crystalline quality and the structural disorder. The photoluminescence spectra display that all the samples have an violet emission peak centered at 416 nm, and 5 at. wt% Fe-doped ZnO nanoparticles have the strongest violet emission peak. These results suggest that 5 at. wt% Fe-incorporation can improve the crystalline quality and enhance the ultraviolet emission of ZnO nanoparticles. The optical band gap has been determined from optical absorption spectra. The optical band gap depends on Fe-doping level and on the microstructure of the samples, and is in the range of 3.20–3.47 eV.