We report exciton and phonon properties of pure and Ag-modified ZnO nanostructures are prepared using solution-based refluxing route. X-ray diffraction studies show lower angle shift in the characteristic diffraction peaks of ZnO. Additional diffraction peaks related to nano-sized Ag were observed from XRD. Broad absorption band (which covers the 400–1000 nm range) results from surface plasmon resonance (SPR) absorption of metallic silver is observed from optical absorption studies. Enhancement in luminescence and Raman scattering is observed in Ag-modified sample when compared with pure ZnO sample. This is attributed to the presence of metallic Ag in the samples, and we attempted to understand the observed enhancement from the perspective of the local field associated with the metal nanoparticles.