Lithium luminescent ZnO:Li nanocrystals have been synthesized. Atomic absorption and optical spectroscopy confirm the high doping level of Li up to 5 at% can be achieved and indicate that the dopants may form neutral Li–Li dimers. The 100 nm width and several milliseconds lifetime long luminescence of the proposed Li–Li dimers occurs around 770 nm and is excited by energy transfer from the ZnO host when pumped in the range between 250 and 420 nm. These parameters of Li-related luminescence have been explained in terms of the energy level diagram of Li–Li dimers, where the Li luminescence is excited by spin-allowed singlet–singlet transitions and occurs due to spin-forbidden triplet–singlet transitions of Li–Li dimers. The milliseconds lifetime of the emitting level of Li dimers and nanosecond lifetime of the feeding state of the ZnO point out a 3-level lasing system. This Li luminescence may be used for the broad spectral range down-conversion of solar spectrum for enhanced efficiency solar cells. The sites for the Li–Li dimers have been proposed, where Li atoms locate in octahedral voids of Zn and O sub-lattices.