Hexagonal Eu(3+):ZnO nanocrystals were synthesized by a modified solgel method. By means of the site-selective spectroscopy at 10 K, two kinds of luminescence sites of Eu(3+) are identified. One site exhibits a long lifetime of (5)D(0) and sharp emission and excitation peaks, which are ascribed to the inner lattice site with an ordered crystalline environment. The other site associated with the distorted lattice sites near the surface shows a relatively short lifetime of (5)D(0) and significantly broadened fluorescence lines. The energy transfer from the nanocrystal host to Eu(3+) confirms that Eu(3+) ions can, to some extent, be incorporated into the ZnO nanocrystal.