Single phase Co/Ni substituted CeO₂ nanoparticles reveal the importance of oxygen vacancies on the electronic properties of the materials. The effect of Co/Ni substitution on the structural, optical, and photoluminescence properties of CeO₂ have been studied systematically. Lattice shrinks and hence strain increase owing to incorporation of Co/Ni in CeO₂. Optical absorption analysis shows a red shift in band-gap with Co/Ni substitution. Photoluminescence studies reveals increase in defect concentration which causes quenching of PL emission. Vibration modes at ~460 cm−1 in Raman spectra indicates incorporation of Co/Ni in CeO₂ lattice whereas a broad peak appearing at ~ 540–640 cm⁻¹ with substitution depicts the defects related to the increase in oxygen vacancy. X-ray absorption (XAS) studies show that Co/Ni substitution maintains local structure while Ce⁴⁺ →Ce³⁺ concentration increases to preserve the charge neutrality in lattice.