Gd_xZn_1−x O (x = 0, 0.02, 0.04 and 0.06) nanostructures have been synthesized using sol–gel technique and characterized to understand their structural and magnetic properties. X-ray diffraction (XRD) results show that Gd (0, 2, 4 and 6 %)-doped ZnO nanostructures crystallized in the wurtzite structure having space group C_3v (P6₃mc). Photoluminescence and Raman studies of Gd-doped ZnO powder show the formation of singly ionized oxygen vacancies. X-ray absorption spectroscopy reveals that Gd replaces the Zn atoms in the host lattice and maintains the crystal symmetry with slight lattice distortion. Gd L₃-edge spectra reveal charge transfer between Zn and Gd dopant ions. O K-edge spectra also depict the charge transfer through the oxygen bridge (Gd–O–Zn). Weak magnetic ordering is observed in all Gd-doped ZnO samples.