1D nanostructures of ZnO, Zn 095Co0.05 and Zn0.85Co0.05Li0.10 O were synthesized by a solvothermal chemical method with and without using oleic acid as a stabilizer. We report a very interesting observation of both room temperature ferromagnetism and photoluminescence properties along with development of different morphological transformation of these nanostructures on doping Co and Li in ZnO in the presence and absence of oleic acid. Zn0.95Co0.05O sample prepared in the presence of oleic acid showed increased saturation magnetization value ( ∼4.1 emu/g and) compared to Zn0.95Co0.05O prepared without oleic acid (∼1.1 emu/g). In both the cases it is observed that Li incorporation further enhances the room temperature ferromagnetic (RTFM) behavior and saturation magnetization values (∼6 emu/g) of luminescent Zn0.95Co0.05O nanostructures. These results are significant, as the luminescent 1D RTFM materials will have implications in photo magnetic devices like magneto-optical switches and sensors.