ZnO-SiO2 nanocomposite films with ZnO nanoparticles dispersed in a silica matrix (molar ratio of ZnO:SiO2 is 25:75) were deposited on quartz glass substrates by the sol-gel method. The optical, microstructural and photoluminescence properties of the films were studied. The films were annealed in air at different temperatures (373-773 K) to investigate the variation of grain size with annealing temperature. The photoluminescence (PL) spectra of the annealed films showed an excitonic emission in the range of 4.22 to 3.85 eV and two defect related emissions in the range of 2.736 to 2.514 eV and 2.45 to 2.32 eV. A linear shift of the peak positions with increasing particle radii (1.48 to 1.95 nm) of the ZnO nanoparticles was observed. The nature of transition of the defect related visible emissions has been discussed. The variation of defect content in the nanocomposites with the radii of the ZnO nanoparticles were examined from the Urbach tail width.