Abstract: Nanocrystalline ZnO doped with Ag-nanoclusters has been synthesized by a salt solid state reaction. Three overlapping broad emission bands due to the Ag nanoclusters have been detected at about 570, 750 and 900 nm. These emission bands are excited by an energy transfer from the exciton state of the ZnO host when pumped in the wavelength range from 250 to 400 nm. The 900 nm emission band shows characteristic orbital splitting into three components pointing out that the anisotropic crystalline wurtzite host of ZnO is responsible for this feature. Heat-treatment and temperature dependence studies confirm the origin of these emission bands. An energy level diagram for the emission process and a model for Ag nanoclusters sites are suggested. The emission of nanocrystalline ZnO doped with Ag nanoclusters may be applied for white light generation, displays driven by UV light, down-convertors for solar cells and luminescent lamps.