In this study, we fabricate ZnO thin films with nano-crystalline Si (nc-Si) quantum dots (QDs) using a ZnO/Si multilayer deposition structure and a post-annealing process, and the formation of high crystallinity of Si QDs embedded in the crystalline ZnO matrix is demonstrated. For optical properties, the essential features of ZnO material, high transmission in long-wavelength and high absorption in shortwavelength ranges, are preserved. We observe significantly enhanced light absorption and an unusual photoluminescence emission peak contributed from the nc-Si QDs in the middle-wavelength range. In addition, we confirm the formation of optical sub-bandgap and the obtained value is quite close to the unusual PL emission peak. We show that meaningful subbandgap can form in ZnO thin film by embedding nc-Si QDs while maintaining the advantageous properties of ZnO matrix. This newly developed composite material, nc-Si QD embedded ZnO thin films, can be useful for various electro-optical applications.