Colloidal Co2+:ZnSe diluted magnetic semiconductor quantum dots (DMS-QDs) were prepared by the hot injection method and studied spectroscopically. Ligand-field electronic absorption and magnetic circular dichroism (MCD) spectra confirm homogeneous substitutional speciation of Co2+ in the ZnSe QDs. Absorption spectra collected at various times throughout the syntheses reveal that dopants are absent from the central cores of the QDs but are incorporated at a constant concentration during nanocrystal growth. The undoped cores are associated with dopant exclusion from the ZnSe critical nuclei. Analysis of low-temperature electronic absorption and MCD spectra revealed excitonic Zeeman splitting energies (Delta E-Zeeman) of these Co2+:ZnSe QDs that were substantially smaller than anticipated from bulk Co2+: ZnSe data. This reduction in Delta E-Zeeman is explained quantitatively by the absence of dopants from the QD cores, where dopant-exciton overlap would be greatest. Since dopant exclusion from nucleation appears to be a general phenomenon for DMS-QDs grown by direct chemical methods, we propose that Delta E-Zeeman will always be smaller in colloidal DMS-QDs grown by such methods than in the corresponding bulk materials.