We report the crystal structure and magnetic properties of Zn(1-x)Co(x)O (0≤x≤0.10) nanoparticles synthesized by heating metal acetates in organic solvent. The nanoparticles were crystallized in the wurtzite ZnO structure after annealing in air and in a forming gas (Ar95% + H5%). The x-ray diffraction and x-ray photoemission spectroscopy (XPS) data for different Co content show clear evidence for the Co(2+) ions in tetrahedral symmetry, indicating the substitution of Co(2+) in the ZnO lattice. However, samples with x = 0.08 and higher cobalt content also indicate the presence of Co metal clusters. Only those samples annealed in the reducing atmosphere of the forming gas, that showed the presence of oxygen vacancies, exhibited ferromagnetism at room temperature. The air annealed samples remained non-magnetic down to 77 K. The essential ingredient in achieving room temperature ferromagnetism in these Zn(1-x)Co(x)O nanoparticles was found to be the presence of additional carriers generated by the presence of the oxygen vacancies.