Abstract We present the theory of a dynamic variant of the non-local coherent potential approximation (DNLCPA) to investigate the spin dynamics in ultrathin magnetic cobalt-gadolinium random alloy films Co 1 - c Gd c n , n atomic monolayers being their thickness. This novel theoretical approach in the classical spin wave representation introduces the idea for the scattering potential of a defect as an operator built up from the phase matching of the spin dynamics on the defect site with the spin dynamics in an otherwise virtual crystal. The scattering potentials are then used to establish a dynamic formulation of the CPA employing the Dyson’s formalism. A mathematical approach is rigorously developed to solve analytically the Dyson T-matrix equation, and determine the unique physical solution for the configurationally averaged Green’s function propagator of the disordered system. The DNLCPA numerical calculations for the Co 1 - c Gd c n systems yield the characteristic eigenmodes and energy dispersion curves of the confined spin wave excitations and their corresponding lifetimes, for arbitrary alloy concentration and diverse film thickness. Our theoretical results for the lifetimes of spin waves depend strongly on their wave vectors, and are in general agreement with recent experimental data. The developed DNLCPA theoretical method is general and can be applied to compute the spin dynamics for any magnetic random binary alloy nanostructure.