CeOx/ZnO nanocomposite powders were prepared by sol-gel process. The powder samples were examined by XRD, TEM, XPS and photoluminescence (PL). PL enhancement of nanocomposite powder at 502 nm compared to pure ZnO was observed when Ce3+ were present in samples. New peak at 603 nm was observed when Ce4+ were present. PL enhancement of nanocomposite powder was correlated with more oxygen vacancies which were caused by Ce3+. The new peak at 603 nm is attributed to new energy transition in the interface of CeO2/ZnO.