Ag decorated silica coated ZnO nanocomposite (Ag®Si02@ZnO NCs) has been synthesized by soft chemical approach. The physico-chemical properties of Ag@Si02@ZnO NCs are investigated by various sophisticated characterization techniques such as X-ray diffraction, Transmission electron microscopy, X-ray photoelectron spectroscopy, UV-visible absorption and photoluminescent spectroscopy. X-ray diffraction confirms the phase formation of ZnO and Ag in nanocomposite. TEM micrograph clearly shows that Ag nanodots are well decorated over silica coated ZnO NCs. The photoluminescent study reveals the enhancement in the photoluminance property when the Ag nanodots are decorated over silica coated ZnO nanocomposite due to an electromagnetic coupling between excitons and plasmons. Furthermore, the photoluminescent property is an important tool for bio-imaging application, reveal that NCs give green and red emission after excitation with 488 and 535 nm. Therefore, low cytotoxicity and excellent fluorescence stability in vitro makes it a more suitable material for both cellular imaging and therapy for biomedical applications.