A new synergetic hybrid Ag/ZnO nanostructure was fabricated which is able to cause photocatalytic degradation (in high yields) of methylene blue under visible light as well as in the dark. In this nanostructure, ZnO was synthesized using the arc discharge method in water and was coupled with Ag via a chemical reduction method. X-ray photoelectron spectroscopy (XPS) and photoluminescence spectroscopy results confirmed the existence of defects in ZnO in the hybrid nanostructures; these defects act as electron traps and inhibit the recombination of electron-hole pairs. The absorption edge of the hybrid nanostructure shifts toward the visible region of the spectrum due to a combination of the Ag plasmonic effect and the defects in ZnO. Band-edge tuning causes effective visible light absorption and enhances the dye degradation efficiency of Ag/ZnO nanostructures. Silver oxidation in the hetero-structure changed the metal-semiconductor interface and suppressed the plasmonic enhancement. Nevertheless, the synthesized Ag/ZnO decomposed methylene blue in visible light, and the silver oxidation only affected the catalytic activity in the dark. This work provides insight into the design of a new and durable plasmonic-metal oxide nanocomposite with efficient dye degradation even without light illumination.