ZrO2 and ZrO2:Dy3+ (0.25, 0.5, 1, 1.5, 2, 2.5, and 3 mol%) powders are synthesized via solution combustion method. Structural, luminescent, and optical characterization of the synthesized series is performed by X-ray diffraction (XRD), Fourier-transform infrared (FTIR) spectroscopy, photoluminescence (PL) spectroscopy, and ultraviolet–visible spectroscopy, respectively. XRD pattern reveals that ZrO2:Dy3+ (1 mol%) has a single-phase tetragonal crystal structure with space group P42/nmc. FTIR spectrum reveals the presence of Zr–O vibration mode of the t-ZrO2 phase. PL result of ZrO2 reveals that a broad band is obtained in the blue region when excited under 240 nm and for ZrO2:Dy3+, three characteristic emission peaks are obtained at 484, 585, and 680 nm that are ascribed to the electronic transition of Dy3+ ion. The optimal molar concentration is obtained at 1 mol% and exchange interaction is the main cause for the concentration quenching process in ZrO2:Dy3+ samples. The optical bandgap of ZrO2 and ZrO2:Dy3+ is found to be 3.27 and 3.50 eV, respectively.