Electron paramagnetic resonance (EPR), optical absorption, and photoluminescence (PL) spectroscopy have been combined to characterize Pb‐doped ZnO ceramic powders. We observe a decrease in the 2.26 eV emission peak and a concomitant smearing of the band edges, narrowing the effective gap of the grains to ≊2 eV with increasing lead content. Both phenomena are at least in part attributed to the formation of a separate PbO‐like phase, likely residing at the grain boundaries. The free‐carrier concentration in the grains was also observed to decrease with increasing Pb content. Our EPR results suggest that this may be due to electron transfer from oxygen vacancy donors to substitutional Pb centers, acting as electron traps. ©1995 American Institute of Physics.