Finely dispersed ZnO (core):Ag (shell) nanostructures were prepared following a simple two-step chemical process. The technique allowed a precisely controlled thin surface coating of Ag, and offers a convenient way for surface functionalization of the ZnO nanoparticles. Substantial improvement in the UV emission confirms intense excitation of the surface plasmons supported by a highly effective metal-semiconductor interfacing in the ZnO:Ag hybrid nanostructures. Besides, the surface modification radically enhanced the light-induced catalytic activity of the ZnO nanoparticles. The superior photocatalytic performance was accredited to the Schottky barrier junctions formed between the ZnO core and Ag shell, which efficiently facilitates the separation of electrons (e(-)) and holes (h(+)), and formation of reactive oxygen species. Photocatalytic degradation of chemical dyes was studied to evaluate the usefulness of the developed samples for wastewater treatment. A possible charge transfer mechanism to elucidate the improvement in the photocatalytic activity was also discussed.