Nanopillars of ZnO were implanted with Au-400keV ions at various ion fluences from 1 × 1E15 cm-2 to 1 × 1E16 cm-2 and subsequently annealed at 750 °C for 15 minutes in order to reduce the implantation damage and to support Au nanoparticle aggregation. It was found that implantation-induced effects and thermal effects influence the Au nanoparticle coalescence as well as the quality of the ZnO nanopillars. RBS showed the broader Au-depth profiles than it was theoretically predicted. The implantation at the higher fluences induced the morphology modification of the nanopillar layer evidenced by RBS and SEM. An indirect evidence of this effect was given by optical ellipsometry due to gradual refractive index changes in the ZnO nanopillars with the increased Au-ion fluence. Optical characterization of the Au-implanted and annealed nanopillars performed by means of photoluminescence (PL) and diffuse-reflectance spectroscopy (DRS) evidenced the surface plasmon resonance (SPR) activity of the embedded Au nanoparticles. The SPR-enhanced scattering and PL emission observed in the spectral range 500–650 nm are ascribed to Au nanoparticles or more complex Au-clusters. In addition, the ellipsometry measurements of extinction coefficient are found to corroborate well results from DRS, both indicating increase of SPR effect with the increase of Au-ion fluence and after the post-annealing.