Applying thermal annealing to hydrothermal ZnO crystals an enhancement of exciton lifetime from 80 ps to 40 ns was achieved boosting PL quantum efficiency of the UV luminescence up to 70 %. The lifetime improvement is related to the reduced density of carrier traps by a few orders of magnitude as revealed by the reduction of the slow decay tail in pump probe decays coupled with weaker defects-related PL. The diffusion coefficient was determined to be 0.5 cm 2/s, providing a large exciton diffusion length of 1.4 μm. The UV PL lifetime drop at the lowest exciton densities was explained by capture to traps. Release of holes from acceptor traps provided delayed exciton luminescence with ∼200 μs day time and 390 meV thermal activation energy. Pump-probe decays provided exciton absorption cross-section of 9 × 10 −18 cm 2 at 1550 nm wavelength and verified the PL decay times of excitons. Amplitudes and decay times of the microsecond slow decay tails have been correlated with the trap densities and their photoluminescence. A surface recombination velocity of 500 cm/s and the bimolecular free carrier recombination coefficient 0.7 × 10 −11 cm 3/s were calculated. Therefore, the properly annealed hydrothermally grown ZnO can be a viable and integral part of many functional devices as light-emitting diodes and lasers.