The adsorption process and valence band structure of Ag on ZnO(10 (1) over bar0) have been investigated by angle-resolved photoelectron spectroscopy utilizing synchrotron radiation. The cove rage-dependent measurements of the Ag 4d band structure reveal that the Ag bands with a dispersing feature are formed even at low coverages and that the basic structure of the bands is essentially the same throughout the submonolayer region. These results indicate that the Ag atoms aggregate to form islands with an atomically ordered structure from the low coverages. Upon annealing the Ag-covered surface at 900 K, the Ag 4d band undergoes only a minor change, suggesting that the ordered structure within the Ag islands is persistent against mild annealing. From the dispersive feature of the Ag 4d states, we propose that the atomic structure has locally rectangular symmetry with a good lattice matching with the ZnO(10 (1) over bar0) surface.