Transition-metal-(Cr, Mn, and Ni)-doped zinc oxide (ZnO) with the concentration of 2.5% and pure ZnO nanocrystalline (nc) films have been fabricated on quartz substrates by the sol−gel method. The X-ray diffraction analysis shows that the films are polycrystalline with the wurtzite phase. The E2high phonon mode shifts about 7 cm−1 with different transition metals, and the A1(LO) phonon mode redshifts 4 cm−1 with the ionic radius of doping elements. From the transmittance spectra, all films are highly transparent in the visible region and exhibit Urbach tail states in the ultraviolet range because of the crystalline defects and grain boundaries. The optical band gap of the films decreases with increasing the orbital occupation numbers of 3d electrons due to the orbital splitting of magnetic ions. It was found that a distinct and strong excitonic transition appears beyond the fundamental absorption region at room temperature. Ultraviolet and near-infrared electronic transitions can be observed and show the strong relationship with the transition metal doping. Moreover, orange, yellow and red luminescences strongly depend on the doping elements owing to different oxygen vacancy, oxygen interstitial, and surface morphology. Magnetic measurement results reveal that all the transition-metal-doped nc-ZnO films show the well-defined ferromagnetic features at room temperature. In particular, the nc-ZnO film doped with Mn shows the largest saturation magnetic moment, which agrees well with the theoretical predication. The ferromagnetic properties could be derived from the doping of magnetic ions, intrinsic defects, interfaces, and grain boundaries in the transition-metal-doped nc-ZnO materials.