5‐Hydroxy‐4,7‐dimethyl‐6‐(phenylazo)coumarin (L) has been synthesized and its novel complexes with Mn(II), Co(II), Ni(II), Cu(II) and Zn(II) metal ions have also been prepared and identified using various analytical tools. The complexes are octahedral binding via one/two oxygen, nitrogen atoms for 1:1 and 1:2 complexes and two/three coordinated water molecules. All the prepared solid complexes behave as neutral in dimethylformamide. The optimized structures of the studied complexes were theoretically investigated at the B3LYP/6‐311G** level. Molecular stability and bond strengths were investigated by applying natural bond orbital analysis. The geometries of the studied complexes are non‐planar as indicated from the values of dihedral angles. The global properties of hardness, global softness and electronegativity were computed. The calculated small energy gap between highest occupied and lowest unoccupied molecular orbital energies shows that charge transfer occurs within the complexes. The obtained total static dipole moment, mean polarizability, anisotropy of polarizability and mean first‐order hyperpolarizability (<β>) were compared with those of urea as a reference material. The results for <β> showed that the complexes are excellent candidates as nonlinear optical materials. The three‐dimensional plots of the molecular electrostatic potential for some selected complexes were investigated.