Pristine and Eu3+-doped BaZrO3 were synthesized via a solid-state reaction method, and the synthesized samples were systematically characterized. X-ray diffraction confirmed the formation of single and pure phases of cubic-structured BaZrO3. Extended X-ray absorption fine structure (EXAFS) spectroscopy revealed the site occupancy of Eu3+ and coordination environment around the different atomic sites. Photoluminescence (PL) excitation and emission spectra revealed the dominant absorption at 275 nm and a broad emission centered at 400 nm due to oxygen vacancies below the conduction band (CB). The PL emission intensity at 597 nm increased with increasing Eu3+ doping concentration; simultaneously, emission from the defect level decreased. This confirmed the efficient energy transfer from oxygen vacancies to Eu3+. Density functional theory was employed to calculate the density of states (DOS) to explain the mechanisms of the PL phenomenon. DOS also showed the presence of impurity states due to Eu3+ doping within the band-gap region. The coincidence of the oxygen vacancy state with Eu f state at the bottom of the CB confirmed the PL energy-transfer mechanisms from the oxygen vacancy to europium. The excited-state lifetime values of the 5D0 state decreased with increasing doping concentration due to the increase of the nonradiative transition rate. The internal quantum efficiency, small excited-state lifetime, and photometric parameters indicated that 3 mol % Eu3+-doped BaZrO3 can be a suitable candidate for the red-light-emitting device applications.