The crucial role of Ni and Mn dopants on the structural, optical, and magnetic characteristics of the zinc oxide (ZnO) nanopowders have been investigated in detail using XRD, diffuse reflectance spectroscopy (DRS), Kramers–Kronig (KK), and vibrating sample magnetometer (VSM). The structural analysis indicates that all patterns are mostly assigned to the hexagonal wurtzite structure. Also, XRD analysis shows that the Ni2+ and Mn2+ ions replace Zn2+ ions which causes lattice strain. Other than the Debye–Scherrer method, the Williamson–Hall method has also been applied to study the influence of strain in the calculation of the crystallite size. Based on DRS data, the band gap of the nanoparticles (NPs) is calculated by Tauc relation in two different ways. The band gap of the synthesized undoped ZnO NPs decreases from 3.25 to 3.23 and 3.15 eV through Ni and Mn doping, respectively. The band gap investigation shows a red-shift with Ni and Mn doping. The width of the localized states or sub-band gap absorption edge (often termed Urbach energy) of the samples was determined by the curves of Ln α versus photon energy hυ. The optical parameters such as complex refractive index, complex dielectric function, and absorption coefficient of the samples were evaluated by applying KK method. Investigating on magnetic properties showed a room temperature ferromagnetic (RTFM) behavior. Also, the interactions and reasons of the observed RTFM mechanisms are examined in detail.