To investigate the dependences of the absorption spectrum and electronic structure properties on the ZnO nano-particle size, ZnO nanocrystals were synthesized by a sol-gel method. The absorption onset peak exhibits a systematic blue-shift with decreasing particle size due to the quantum confinement effect, as well as, with decreasing $Zn^{2+}$ concentration. The increase of particle size is mainly controlled by coarsening and aggregation step during the nucleation and growth of ZnO nano-particles. The onset absorption spectrum of ZnO colloids changes from 310 to 355 nm as $Zn^{2+}$ concentration increases from 0.01 to 0.1 mole. The average particle size as a function of aging- time can be determined from the absorption spectra. The freshly prepared nanocrystal size was about 2.8nm.