V-doped ZnO nanoparticles were synthesized by heating metal acetates in organic solvent. All synthesized samples were annealed in air and reducing gas atmosphere at 600 degrees C for 8 h. The XRD patterns of both samples annealed in air and reducing atmosphere indicate that samples have polycrystalline wurtzite structure with increase in lattice constant with increase in V-doping. The particle sizes were calculated by using Scherrer's equation which lies in the range of 25-30 nm. The SEM images show that particles annealed in air and under reducing environment are spherical in nature. The EDX results reveal that samples contain V, Zn, and O contents only. The TPR results indicate that the system contains isolated VOx, ZnOx and bimetallic Zn: V (O-x) sites and indication of electronically excited bimetal sites. There is no signature of ferromagnetism in all samples annealed in air while room temperature ferromagnetism has been observed only under reducing atmosphere annealing. There is monotonically increase in saturation magnetization with V-doping concentration. UV-vis spectroscopy study shows that there is a linear increase in band gap energy with increase in V-doping, a direct evidence of change in magnetic properties due to V-doping and under reducing environment. (C) 2009 Elsevier B. V. All rights reserved.