Zn 1−x Co x O (x = 0, 0.005, 0.01, 0.02, 0.03, 0.06, 0.12) powders have been synthesized by the microemulsion method. XRD patterns confirm the pure wurtzite structure without any impurity phase. TEM images illustrate that Zn 1−x Co x O particles are formed by aggregation of small crystallites. The magnetization measurements show clear room-temperature ferromagnetism in Zn 1−x Co x O (x = 0, 0.005, 0.01), and the saturated ferromagnetic magnetization increased with increasing Co concentration to 0.01. However, the ferromagnetic magnetization decreased drastically with further increasing Co concentration (x > 0.01). PL spectra clearly show an increasing concentration of oxygen vacancies with increasing Co concentration to 0.01, and strong suppression of oxygen vacancies with further increasing Co concentration in Zn 1−x Co x O. We conclude that the high concentration of oxygen vacancies is the key origin for the observed ferromagnetism in Co-doped ZnO.