Successful doping of Eu3+ ions into ZnO nanocrystals has been realized by using a low temperature wet chemical doping technique. The substitution of Eu3+ for Zn2+ is shown to be dominant in the Eu-doped ZnO nanocrystals by analyzing the X-ray diffraction patterns, transmission electron microscopy images, Raman and selectively excited photoluminescence spectra. Measurement of the luminescence from the samples shows that the excited ZnO transfers the excited energy efficiently to the doped Eu3+ ions, giving rise to efficient emission at red spectral region. The red emission quantum yield is measured to be 31% at room temperature. The temperature dependence of photoluminescence and the photoluminescence excitation spectra have also been investigated, showing strong energy coupling between the ZnO host and Eu3+ ions through free and bound excitons. The result indicates that Eu3+ ion-doped ZnO nanocrystals are promising light-conversion materials and have potential application in highly distinguishable emissive flat panel display and LED backlights.