Effects of doping concentration and annealing atmosphere on the luminescent properties of $Er^{3+}$ doped ZnO phosphor powders were investigated. Photoluminescence (PL) spectra of ZnO:Er exhibit an orange emission band at around 575 nm, while those of pure ZnO show a green emission at 520 nm. Emission difference between ZnO:Er and pure ZnO is attributed to the energy transfer of Er ions in ZnO. The highest PL intensity is obtained by doping 1 mol% Er to ZnO. Luminescent properties of ZnO:Er phosphors annealed at $N_2$+vacuum atmosphere are superior to those annealed at $N_2$ atmosphere.