Zinc oxide (ZnO) nanoparticles (NPs) have a wide range of biomedical applications. Present study demonstrates the new methodology in sol-gel technology for synthesizing Polyethylene glycol (PEG) capped ZnO NPs and its size effect on anti-microbial activity. The reaction time was increased from 1 h to 5 h for the synthesis of ZnO NPs at 130 °C. The size of PEG capped ZnO NPs is increased from 10 to 84 nm by increasing the reaction upto 5 h. The x-ray diffraction studies and transmission electron microscopy analysis reveals the phase purity and hexagonal wurtzite crystal structure with uniform PEG capping on the surface of ZnO NPs. UV–visible spectroscopy exhibits the peak at 366 nm which is attributed to ZnO NPs. No adverse effect is observed in case of absorbance spectroscopy. Further, Fourier transforms infrared spectroscopy and thermo gravimetric analysis depicts the adsorption of PEG molecules on the ZnO NPs surface. The anti-microbial activities for both Gram-positive (S. aureus) and Gram-negative (E. coli) bacteria were studied by optical density (OD) mesurement. The remarkable anti-microbial activity was observed for PEG capped ZnO NPs synthesized at 1 h reaction time showing higher activity in comparison with that synthesized from 2 h to 5 h reaction time. The microbial growth was found to be inhibited after 10 h OD measurement for both the bacteria. The anti-microbial activity may be attributed to the generation of ROS and H2O2. However, these generated species plays a vital role in inhibition of microbial growth. Hence, PEG capped ZnO NPs has promising biomedical applications.