The as‐synthesized 5% Ni‐doped single phase ZnO powder sample (Zn0.95Ni0.05O), prepared by solid state reaction method, shows a paramagnetic ground state at room temperature. However, when annealed under hydrogen atmosphere it shows a remarkable ferromagnetic state at 300 K. The hydrogen induced ferromagnetism is found to be reversible with regard to its re‐heating in air. To investigate the electronic properties of this Ni‐doped ZnO sample, we have carried out the element‐sensitive X‐ray‐absorption spectroscopic measurements, using synchrotron radiation, in the vicinity of the Ni 2p edge, the O K edge, and at the Zn 2p edge. The spectroscopic measurements show substantial changes in the near edge spectra of H‐annealed samples with respect to the as‐synthesized sample. The observed spectral changes may derive from both the Ni 3d‐O 2p hybridization and also from lattice defects such as oxygen vacancies. The spectral changes have been correlated with the room temperature ferromagnetism observed in this system which is very promising candidate for the future spintronic applications.