Highly photocatalytically active silver-modified ZnO has been prepared and the effect of silver modification was studied. The structural and optical properties were characterized by X-ray diffraction, Fourier transform IR, differential scanning calorimetry, BET surface area, Raman, UV-vis, and photoluminescence spectroscopy. The photocatalytic activity of these materials was studied by analyzing the degradation of an organic dye, rhodamine 6G (R6G), and it is found that 3 mol % silver-modified ZnO at 400 °C shows approximately four times higher rate of degradation than that of unmodified ZnO and a three times higher rate than that of commercial TiO 2 photocatalyst Degussa P-25. It was also noted that the photocatalytic activity for the modified ZnO sample was five times higher than the unmodified sample using sunlight. The effect of silver in enhancing the photocatalytic activity has been studied by analyzing the emission properties of both ZnO and silvermodified ZnO in the presence (emission increases) and absence (emission decreases) of R6G. We attribute these observations to the extent of valence band hole production and the role of silver in trapping the conduction band (CB) electrons in the absence of R6G. In the presence of R6G, the dye preserves the CB electron population in the metal oxide, thus preserving and enhancing emission intensity. The sensitizing property of the dye and electron scavenging ability of silver together constitute to the interfacial charge transfer process in such a way to utilize the photoexcited electrons.