Systematic structural studies on Tb3+ ion doped ZnO nanoparticles were carried out using X-ray diffraction, X-ray photoelectron spectroscopy and photoluminescence studies. Our XRD study shows a contraction effect as the dopant ion concentration is increased. The dislocation densities and the surface area calculation also show an increase up to a certain concentration of Tb, which reveals the increase in the surface defects when Tb is incorporated in ZnO host lattice. PL study confirms the presence of band edge as well as defect related transition.