Nano-crystals of ZnO, Eu³⁺ doped ZnO, and Li⁺, Eu³⁺ co-doped ZnO have been prepared by urea hydrolysis in ethylene glycol medium at 150 ºC. Ethylene glycol acts as capping agent for nanoparticles. Three colors 437 (blue), 540 (green) and 615 nm (red) from 2 at.% Li⁺ and 5 at.% Eu³⁺ co-doped ZnO have been observed from luminescence studies compared to that from 5 at.%. Eu³⁺ doped ZnO, which shows emission at 437 and 615 nm. It is established that green light is originated from the oxygen vacancy brought by Li⁺ incorporation into ZnO. Particles are redispersible in organic solvent such as ethanol, and are able to incorporate into polymer-based material such as SiO² matrix.