The preparation, characterization, and magnetic properties of dispersible Co- and Ni-doped ZnO nanocrystals (NC) are reported. The nanocrystals, Zn_1-xTMO where x = 0-0.07 for TM = Co and x = 0.02, 0.03 for TM = Ni have been synthesized by nonhydrolytic alcoholysis esterification elimination reaction using anhydrous metal carboxylates as precursors in the presence of oleic acid and oleyl alcohol at temperatures as low as 220 °C. The prepared nanocrystals can be easily dispersed ill solvents like chloroform and toluene. Detailed X-ray diffraction (XRD) using synchrotron radiation (SR), microstructure, and Raman studies reveal that the Co-doped ZnO nanocrystals are single-phase wurtzite structure without any parasitic secondary phases and Co atoms are incorporated into the ZnO lattice and located at the substitutional sites of the Zn atoms. Magnetic studies as a function of temperature and field indicate that Co- and Ni-doped zinc oxide nanocrystals are ferromagnetic at room temperature (RT). The observed ferromagnetism in Co-doped ZnO nanocrystals is interpreted in terms of a spin-split donor impurity-band model. The detection of donor defects bound to Co sites by Raman spectroscopy and decreased magnetization ill oxygen-annealed samples suggest that activation of ferromagnetism depends oil defects, such as oxygen vacancies (V_O) and zinc interstitials (Zn_i). On the other hand, the observation of secondary phases like NiO and Ni in the powder XRD patterns of Ni-doped ZnO nanocrystals suggests the extrinsic origin of ferromagnetism in this material.