In the present work it has been demonstrated that Eu doped ZnO–SnO2 nanocomposite shows enhanced photoluminescence in comparison to individual ZnO:Eu or SnO2:Eu. Luminescence studies have confirmed that Eu3+ ions mainly occupy Sn4+ sites in the SnO2 part of the composite. Hetero-junction assisted energy transfer from ZnO to SnO2:Eu3+ has been assigned as the reason for this relative improvement in luminescence behavior. Based on the X-ray diffraction nuclear magnetic resonance studies it is confirmed that at higher annealing temperature, Zn2SnO4 phase forming at the interface of SnO2 and ZnO prevents the energy transfer between ZnO and SnO2:Eu and thereby decreases photoluminescence intensity. Deterrent of ZnO and SnO2 interaction via silica dispersion of nanocomposite resulted in deterioration of luminescence properties further reaffirms the role of ZnO:SnO2 hetero-junction.