In this paper, we conducted a fundamental study concerning the effect of thermal treatment on the structure and morphology of 2 mol% vanadium doped ZnO nanopowders obtained by microwave assisted sol–gel method (MW). The samples were analyzed by DTA, FTIR, XRD, SEM, and UV–Vis spectroscopy. The DTA results showed that above 500 °C, there was no mass loss in the TG curves, and ZnO crystallization occurred. The XRD patterns of the thermally treated powders at 500 °C and 650 °C showed the crystallization of ZnO (zincite) belonging to the wurtzite-type structure. It was found that in the 650 °C thermally treated powder, aside from ZnO, traces of Zn3(VO4)2 existed. FTIR spectra of the annealed samples confirmed the formation of the ZnO crystalline phase and V–O bands. The micrographs revealed that the temperature influenced the morphology. The increase in the annealing temperature led to the grain growth. The SEM images of the MW powder thermally treated at 650 °C showed two types of grains: hexagonal grains and cylindrical nanorods. UV–Vis spectra showed that the absorption band also increased with the increasing temperature of thermal treatment. The MW sample annealed at 650 °C had the highest absorption in ultraviolet domain.