X-ray absorption (XANES, EXAFS, XMCD) and photoelectron (XPS) spectroscopic techniques were employed to study local structural, electronic and magnetic properties of Zn0.95Co0.05O nanopowders. The substitutional Co2+ ions are incorporated in ZnO lattice at regular Zn sites and the sample is characterized by high structural order. There was no sign of ferromagnetic ordering of Co magnetic moments and the sample is in paramagnetic state at all temperatures down to 5 K. The possible connection of the structural defects with the absence of ferromagnetism is discussed on the basis of theoretical calculations of the O K-edge absorption spectra. (C) 2015 Elsevier Ltd. All rights reserved.