Palladium (Pd)-functionalized ZnO nanowires were synthesized by thermal evaporation of a ZnO/graphite powder mixture followed by solution method. The ZnO nanowires had a rod-like morphology with relatively uniform width and length. The widths and lengths of the nanowires ranged from 30 to 100 nm and 5-10 µm, respectively. The diameters of the Pd particles on the nanowires ranged from 5 to 50 nm. Effects of postannealing on the photoluminescence properties of Pd-functionalized ZnO nanowires were examined. Thermal annealing resulted in an increase and decrease in the near-band edge (NBE) and deep level (DL) emission intensities of Pd-capped ZnO nanowires, respectively, whereas both the NBE and DL emission intensities of uncapped ZnO nanowires were increased by annealing. The intensity ratio of NBE emission to DL emission of the Pd-capped ZnO nanowires was increased ~18 fold by annealing in a hydrogen atmosphere. The underlying mechanism for NBE emission enhancement and DL emission suppression of Pd-capped ZnO nanorwires by postannealing is discussed based on the surface plasmon resonance effect of Pd.