Magnetic-ion-rich nanoscale inclusions formed by spinodal decomposition have been observed in many diluted magnetic semiconductors and have recently been implicated in the ferromagnetic ordering observed in some of these materials. In this study, colloidal nanocrystals of the ternary alloy wurtzite Zn 1-x Co x O, with x ranging from 0.0 (w-ZnO) to 1.0 (w-CoO), have been synthesized as model systems for the proposed spinodal decomposition nanostrucures of ferromagnetic Zn 1-x Co x O thin films and powders. As freestanding nanocrystals, these phases do not show any signs of ferromagnetism or superparamagnetism at any value of x. Changes in the electronic absorption and magnetic circular dichroism (MCD) spectra with x are described that should allow optical identification of spinodal decomposition in other Zn 1-x Co x O samples. Optical and magneto-optical spectroscopic results are presented for the end member of this series (w-CoO), apparently for the first time, and show this binary oxide to be an indirect gap chargetransfer insulator with E g ≈ 2.3 eV.