A comprehensive review of up-conversion (UP) and down-conversion (DC) or down shifting of rare earth (RE) doped zinc oxide (ZnO) nanophosphors is presented. Research interest in the development of RE 3+ doped ZnO for UP and DC nanophosphors has been encouraged by the potential application of these materials in light emitting diodes and different types of photovoltaic cells. A range of remarkable characteristics, which are organized into different sections describing the structure, optical, and luminescence properties of these materials, are discussed in detail. Undoped ZnO has two characteristic emissions in the ultraviolet and visible regions related, respectively, to excitonic recombination and intrinsic defects. X-ray photoelectron spectroscopy (XPS) data demonstrated a correlation between the visible emission and intrinsic defects. In the case of the DC or shifting process, there was simultaneous emissions related to f → f transitions of RE ions and defects in ZnO host. These emissions were dependent on the synthesis method, annealing temperature, and RE ion concentration, among other things; only f → f transitions of RE ions were observed in the case of the UC process. These down and up conversion RE doped ZnO phosphors were evaluated for a possible application in solid state lighting and photovoltaic cells.