We discuss the fabrication of 1 mol% Eu-doped 70 SiO<sub>2</sub>–(30-x) HfO<sub>2</sub>–x ZnO (x = 0, 2, 5 and 7 mol%) ternary glass-ceramic waveguides, and the effect of ZnO–HfO<sub>2</sub> hybrid nanocrystals on the optical gain in Eu-doped ternary waveguides. Formation and growth of ZnO–HfO<sub>2 </sub>hybrid nanocrystals have been observed in the TEM images with increase of ZnO concentration in the samples. Waveguiding properties of Eu-doped ternary waveguides were measured using lab-built prism-coupling technique. Propagation losses of the waveguides were measured using photometric detection technique and found to be between (0.3 to 0.6)±0.2 dB/cm. We have further investigated the optical amplification of red emission line (<sup>5</sup>D<sub>0</sub> → <sup>7</sup>F<sub>2</sub>) of Eu-ions in these waveguides using the variable stripe length method wherein the waveguides were pumped by continuous wave 532 nm laser in a stripe-like geometry using cylindrical lens The optical gain coefficients are found to be 5.3, 4.8, 3.7 and 0.1 cm<sup>−1</sup> for ZnO concentration of 0, 2, 5 and 7 mol% respectively.