Co and N co-doped ZnO nanopowders with Co and N concentration 4, 6, and 8 mol% were synthesized by sol-gel method. Powder X-ray diffraction reveals that Co and N co-doped ZnO crystallize in wurtzite structure having space group C (6v) . Photo-luminescence studies show the reduction in band gap with increase in concentration of dopants. Micro Raman studies show the red shift for 1LO phonon peak with increase in doping, generally credited to the stress caused by lattice mismatch due to N doping in ZnO. X-ray absorption spectroscopy reveals that Co replaces the Zn atoms and N replace the O atoms in the host ZnO lattice. Magnetic studies show that Co and N co-doped ZnO nanopowders exhibit ferromagnetic character at room temperature.