Zn 1−x Fe x O nanoparticles with different doping concentration i.e. (x = 0, 0.01, 0.02, 0.03, 0.04, 0.05) were successfully synthesized via hydrothermal method. The crystal structure, morphology, optical and magnetic properties were studied by X-ray diffraction, field emission scanning electron microscope, UV-visible, photoluminescence spectra (PL) and vibrating sample magnetometer. The experimental results show that all the samples possess a single phase hexagonal wurtzite structure, no impurity phase was observed. The crystallite size decreases with the increase in Fe concentration. Optical absorption analysis by UV-visible exhibits a slight blueshift in the bandgap with increasing doping concentration. PL spectra shows that the emission peak in the UV region is absent for all the samples. All the emission peaks are in the visible region. Shifting of PL emission peaks is not observed indicating that the intrinsic defects are consistent. The magnetic observation indicated that all the samples including pure zinc oxide exhibit room temperature ferromagnetism (RTFM). The observed RTFM is attributed to the bound magnetic polaron that arises due to the presence of singly ionized oxygen vacancy (V o) as indicated by PL spectra.