Terahertz time-domain spectroscopy was used to measure the optical properties of ZnO nanoparticles (NPs) in the composite samples. The complex conductivity of pure ZnO NPs was extracted by applying Bruggeman effective medium theory. We find that the real part of the complex conductivities increase with the increasing diameter of the ZnO NPs and are governed by a restricted mean free path for NPs. The results demonstrate that carriers become localized with a backscattering behavior in nano-structured ZnO.