We report the microstructure, optical properties and high photocatalytic performance, with correlations between them, of coprecipitated and post-annealed ZnO nanoparticles. The obtained ZnO single phase after post annealing at different temperatures (200 – 600 ^oC) was identified by X-ray diffraction (XRD) and its morphology was investigated by transmission electron microscopy (TEM). The TEM results indicate a gradual growth of the spherical-like nanoparticles to nanorod-like shapes by post annealing with common nanorods shape by annealing at 600 ^oC. XRD Rietveld refinements indicated that the global structure parameters such as lattice constants, bond lengths, and oxygen position are slightly affected by the post annealing. While the crystallite size and number of unit cells per a particle gradually increase, the dislocation density, micro-strain and residual stress gradually decrease by the post annealing with a further change at annealing temperature of 500 ^oC, indicating correlations to the particles shape. Based on optical absorbance measurements, it was found that the optical energy gap gradually decreases from 3.22 to 2.89 eV by increasing the annealing temperature up to 600 ^oC. After a period up to 90 min of irradiation, photo-catalytic efficiency of up to 95% was observed in the photo-degradation of methylene blue. In addition, the nanoparticles annealed at low temperature showed better performance in the photo-degradation of methylene blue. The observed high photocatalytic performance is discussed in correlation to the microstructure and optical properties of the investigated samples.