We present a spectroscopic study of Zn1−xCoxO layers grown by molecular beam epitaxy on sapphire substrates. Zn1−xCoxO is commonly considered as a promising candidate for being a Diluted Magnetic Semiconductor ferromagnetic at room temperature. We performed magnetooptical spectroscopy in the Faraday configuration, by applying a magnetic field up to 11 T, at temperatures down to 1.5 K. For very dilute samples (x < 0.5%), the giant Zeeman splitting of the A and B excitons is observed at low temperature. It is proportional to the magnetization of isolated Co ions, as calculated using the anisotropy and g-factor deduced from the spectroscopy of the d-d transitions. This demonstrates the existence of spin-carrier coupling. Electron-hole exchange within the exciton has a strong effect on the giant Zeeman splitting observed on the excitons. From the effective spin-exciton coupling, N0(α − β) X = 0.4 eV, we estimate the difference of the exchange integrals for free carriers, N0|α − β| ≃ 0.8 eV. The magnetic circular dichroism observed near the energy gap was found to be proportional to the paramagnetic magnetization of anisotropic Co ions even for higher Co contents.