Diluted magnetic semiconductors Zn1-xFexO nanoparticles with different content (x=0, 0.01, 0.05, 0.10 and 0.20) were successfully synthesized via hydrothermal method. The X-ray diffraction (XRD) shows that the samples are wurtzite structure and metallic Fe or other secondary phases were not found in the samples. The transmission electron microscopy (TEM) shows that the morphology is nanoparticles with good dispersion, and the lattice is clearly visible. Raman scattering spectrum (Raman spectra) shows that E2(High) mode broadened, shifted towards the high-frequencies side and decreased the peak intensity. Photoluminescence spectra (PL) shows that the peaks moved to lower energy and the photoluminescence intensity was quenched with increasing Fe doping concentration. The ultraviolet-visible spectrophotometry (UV-Vis) indicates that the optical band gap decreased and red shift occured. All the results indicate that Fe3+ ions successfully substituted for Zn2+ and were incorporated into the crystal lattice of ZnO.