ZnO/MgO (core/shell) nanowires (NWs) grown by a two-step vapour transport method under different MgO shell growth conditions are examined by x-ray diffraction, photoluminescence (PL) excitation and temperature (10–300 K) dependent PL. The excitonic-to-defect PL ratio is increased by more than two orders of magnitude in the core/shell as compared to bare ZnO NWs. Concomitantly, a strong depression of the PL thermal quenching, most particularly for the visible part of the PL spectrum, occurs. Using a semi-quantitative model, results are interpreted as a strong radiative to non-radiative lifetime ratio reduction due to defect passivation at the ZnO NW walls and photocarrier confinement within the ZnO core by the MgO shell. These beneficial effects are, however, significantly weakened when metal interdiffusion across the core/shell interface is favoured during the shell growth. Non-radiative recombination lifetime in the sample with sharp core/shell interface is described by a single activation energy of 15 meV (bound exciton release). For interdiffused cases and bare ZnO an additional activation energy of 60 meV (free exciton breakup) is observed.