The microstructural, optical and photocatalytic properties of undoped and 5% Zn doped CeO2 nanocrystals (NCs) have been explored through various analytical techniques, viz. powder x-ray diffraction (PXRD), x-ray photoelectron spectroscopy (XPS), transmission electron microscopy (TEM), UV-visible, Raman and photoluminescence (PL) spectroscopy. XRD data analysis revealed face centred cubic (FCC) crystal symmetry of the samples with average crystallite size in the range of 19-24 nm. XPS results confirmed that the Zn ions exist in +2 states and successfully incorporated into the CeO2 matrix. Internal structure and morphology observed by TEM exhibited almost uniform cubical shape of the particles of average size ~20-26 nm. The enegy bandgap of undoped and Zn doped CeO2 NCs had a direct transition of 3.46 eV and 3.57 eV respectively as estimated by the optical absorption data. The increase in the bandgap revealed blue shift of absorption edge due to the quantum confinement effects. The NCs exhibited an inherent luminescence emission peak at ~408 nm in PL spectra. Improvement in the photocatalytic activity was observed for Zn incorporated sample attributed to the enhanced light absorption or/and fall in charge recombination rate between CeO2 and Zn.