Colloidal reduced ZnO nanocrystals are potent reductants for one-electron or multielectron redox chemistry, with reduction potentials tunable via the quantum confinement effect. Other methods for tuning the redox potentials of these unusual reagents are desired. Here, we describe synthesis and characterization of a series of colloidal Zn1-xMgxO and Zn0.98-xMgxMn0.02O nanocrystals in which Mg2+ substitution is used to tune the nanocrystal reduction potential. The effect of Mg2+ doping on the band-edge potentials of ZnO was investigated using electronic absorption, photoluminescence, and magnetic circular dichroism spectroscopies. Mg2+ incorporation widens the ZnO gap by raising the conduction-band potential and lowering the valence-band potential at a ratio of 0.68:0.32. Mg2+ substitution is far more effective than Zn2+ removal in raising the conduction-band potential and allows better reductants to be prepared from Zn1-xMgxO nanocrystals than can be achieved via quantum confinement of ZnO nanocrystals. The increased conduction-band potentials of Zn1-xMgxO nanocrystals compared to ZnO nanocrystals are confirmed by demonstration of spontaneous electron transfer from n-type Zn1-xMgxO nanocrystals to smaller (more strongly quantum confined) ZnO nanocrystals.