Gold nanoparticles (AuNPs) embedded ZnO thin films were prepared by sandwiching a thin thermally evaporated Au film between two sputtered ZnO films. The films were characterized by high resolution transmission electron microscopy (HRTEM), glancing angle X-ray diffraction (GXRD), optical absorption and photoluminescence (PL) measurements. GXRD data exhibited peaks which were attributed to the reflections from various ZnO and Au planes. Size dependence of the plasmon absorption was studied by forming nanoparticles with various sizes. Optical absorption spectra showed strong absorption due to localized surface plasmons at about 608, 638 and 676 nm for films having average AuNPs sizes of 27, 40 and 67 nm respectively. AuNPs embedded ZnO film showed a strong reduction in the intensity of photoluminescence, which was prominent in the case of pure ZnO film. The rise in temperature at a single nanoparticle site was calculated to be 22 K for a particle size of 80 nm. © 2009 Elsevier B.V. All rights reserved.