The electronic, structural and magnetic properties of Mn doped cadmium sulfide Cd1−xMnxS (x=6.25% and x=3.125%) are studied using spin-polarized density functional theory, in the framework of Local Density Approximation (LDA), Generalized Gradient Approximation (GGA), their extensions via on-site Hubbard U interactions and Tran Blaha modified Becke–Johnson (TB-mBJ) model potential. The Ferromagnetic interactions are studied between two Mn atoms via S atom due to strong p–d hybridization and d–d interactions. The ferromagnetic (FM) and anti-ferromagnetic (AFM) coupling properties between these atoms are studied with and without sulfur vacancies. The magnetic moments on Cd, S and Mn-atom are studied in detail by using different charge analysis techniques. The p–d hybridization reduces the local magnetic moment on Mn from its free space charge value and produces small local magnetic moments on the nonmagnetic Cd and S host sites. Mn doped CdS provides p-type semiconductor with d-states at top of the valence band edge, these states are responsible for a very useful luminescent and magneto-optical Mn:CdS material.