Pure ZnO and a series of Al and Er co-doped ZnO nanomaterials (AEZ) have been synthesized and characterized by various analytical and spectroscopic techniques such as TEM, EDS, XRD, FTIR, Raman, UV-Vis and SQUID. Al concentration has been varied from 1, 2 and 3% keeping fixed concentration of Er at 2% to obtain the co-doped ZnO. TEM images show uniform and homogeneously distributed plates-like nanostructure for ZnO and predominately spherical shape with hexagonal facets for AEZ. XRD Rietvield analysis confirms the crystallinity of ZnO and AEZ with ZnO wurtzite crystal structure. It also clearly demonstrates the coexistence of Al and Er into ZnO lattice as evidenced by the shift of reflections towards lower 2 theta values. The change of magnetic behavior from ferromagnetic into paramagnetic originated from point defects depending on the concentration of the doping elements. The as-prepared nanopowders have been tested under visible light (554 nm wavelength) irradiation to evaluate the photocatalytic activity towards Rhodamine B (RhB); the degradation rate was found to be more than 93% in 40 min with the combination 3% Al, 2% Er co-doped ZnO.