Zn0.9Cd0.1S:yCo nanoparticles were prepared by a co-precipitation method at low temperature. The obtained products were identified to be of cubic structure without any impurity phase. Cobalt incorporation leads to an increase in the local strain value and a decrease in the lattice constants as measured from XRD. Magnetic measurements showed that cobalt was incorporated in the Zn0.9Cd0.1S lattice as Co2+ and substituted for the Zn site as there was no evidence of the presence of metallic cobalt. Transmission electron microscopy suggests the crystalline nature of nanoparticles, with average particle size of ∼3.5 nm. UV-Vis measurements showed a red shift with respect to undoped nanoparticles in energy band gap with increasing cobalt concentration. Photoluminescence spectra reveal the defect-related emissions. The decay time constant is found to be in the nanosecond regime and is attributed to the spatial confinement of photo generated electron-hole pairs. © 2010 Springer-Verlag.