Improving the performance of photoactive solid-state devices begins with systematic studies of the metal–semiconductor nanocomposites (NCs) upon which such devices are based. Here, we report the photo-dependent excitonic mechanism and the charge migration kinetics in a colloidal ZnO–Au NC system. By using a picosecond-resolved Förster resonance energy transfer (FRET) technique, we have demonstrated that excited ZnO nanoparticles (NPs) resonantly transfer visible optical radiation to the Au NPs, and the quenching of defect-mediated visible emission depends solely on the excitation level of the semiconductor. The role of the gold layer in promoting photolytic charge transfer, the activity of which is dependent upon the degree of excitation, was probed using methylene blue (MB) reduction at the semiconductor interface. Incident photon-to-current efficiency measurements show improved charge injection from a sensitizing dye to a semiconductor electrode in the presence of gold in the visible region. Furthermore, the short-circuit current density and the energy conversion efficiency of the ZnO–Au NP based dye-sensitized solar cell (DSSC) are much higher than those of a DSSC comprised of only ZnO NP. Our results represent a new paradigm for understanding the mechanism of defect-state passivation and photolytic activity of the metal component in metal–semiconductor nanocomposite systems.