Transparent Zn1-xMgxO (x=0.01, 0.03, and 0.05) nanocrystalline films were prepared by sol-gel method followed by thermal annealing treatment of 700°C. Mg doping effect on the microstructural and optical properties of the Zn1-xMgxO films is investigated. From SEM images of all films, mean sizes of uniform spherical grains increase progressively. Pure wurtzite structure is obtained from the results of XRD. Grain sizes increase from 34.7 nm for x=0.01 and 37.9 nm for x=0.03 to 42.1 nm for x=0.05 deduced from the XRD patterns. The photoluminescence spectra of the films show a strong ultraviolet emission and a weak visible light emission peak. The enhancement of ultraviolet emission and reduction of visible emission are observed due to the increase of Mg doping concentration and the corresponding decrease of oxygen vacancy defects. Besides, the characteristics of the dark/photo currents with n-Zn1-xMgxO/n-Si heterojunction are studied for photodetector application.