In this study, Cadmium Zinc Sulfide (CdZnS) and Ni-alloyed CdZnS (Ni:CdZnS) nanoparticles (NPs) prepared at room temperature by co-precipitation method using mercaptoethanol as a capping agent for the first time. The structural, optical and magnetic properties of NPs were characterized by using X-ray diffraction (XRD), ultraviolet-visible (UV-Vis) spectroscopy and physical property measurement system (PPMS). The average crystalline size of cubic phase of Ni:CdZnS NPs estimated from the XRD and optical absorption measurements was found smaller than that of cubic phase of CdZnS NPs. The optical measurements showed that the absorption edge of Ni:CdZnS NPs slightly shifts towards the lower wavelengths compare to un-doped CdZnS NPs. The band gap of CdZnS NPs (3.79 eV) increases with Ni dopant (4.02 eV) into the CdZnS structure. The temperature (M (T)) and field (M (H)) dependence magnetization data collected from PPMS indicated that a ferromagnetic behavior is observed in Ni:CdZnS NPs whereas CdZnS NPs show diamagnetic behavior.