In this study, the special quasi-random structure (SQS) approach has been considered for structural, electronic and optical properties of rock-salt (RS) and zinc-blende (ZB) phases of ZnO1−xTex (x = 0, 0.25, 0.5, 0.75 and 1) using density functional theory. The Wu–Cohen generalized gradient approximation (GGA) has been employed for optimizing the lattice parameters (a0) and bulk moduli (B0) in both phases which show reasonable agreement with numerous theoretical and experimental results. To compute the band gaps with high degree of precision, we employed Engel–Vosko GGA and modified Becke and Johnson local density approximation (mBJLDA) functionals. In the RS phase, metallic nature of the compounds under investigation is evident for 0.25 < x < 1, whereas direct band gap appears at all concentrations in ZB phase. The density of states (total and partial) are presented to comprehensively analyze the electronic structure of all compounds. Contrary to earlier theoretical studies, the mBJLDA band gap values for the end binaries appear to be significantly improved showing overall better agreement with the experimental data. The optical properties of ZnO1−xTex alloys in the ZB phase are also discussed in terms of dielectric function which show their potential utilization in optoelectronic devices.