By using the r.f. sputtering technique CdNiTe nanostructured layers were prepared onto glass substrates. The nanoparticles in the films appear to have spherical shape with broad grain-size distribution. The measured average diameters were 35, 30, and 26 nm corresponding to 5, 10, and 15 nickel percent atomic content in the film, respectively. Energy dispersion spectroscopy indicates that Ni enters into the CdTe lattice in Cd sites. The structure of the nanostructured layers was zincblende cubic that resembles the bulk CdTe semiconductor. Particle-size effects on optical absorption spectra were observed. As the Ni content increases, the grain-size diameter diminishes, and the band-gap energy (E-g) increases. E-g shifts have been found higher than the predicted values from the strong and weak quantum confinement models. Disagreement was explained by considering extra E-g shifts as an effect of the lattice shrinkage originated from the replacement of Cd2+ by Ni2+ with smaller ionic radius, into the CdTe lattice.