X-ray photoemission spectroscopy (XPS), X-ray diffraction (XRD) and transmission electron microscopy (TEM) have been used to study the structural and morphological characteristics of cobalt doped tin(IV) oxide (Sn1−xCoxO2; 0 ≤ x ≤ 0.04) nanocrystals synthesized by a chemical co-precipitation technique. Electronic structure analysis using X-ray photoemission spectroscopy (XPS) shows the formation of tin interstitials (Sni) and reduction of oxygen vacancies (VO) in the host lattice on Co doping and that the doped Co exists in mixed valence states of +2 and +3. Using XRD, the preferential position of the Sni and doped Co in the unit cell of the nanocrystals have been estimated. Rietveld refinement of XRD data shows that samples are of single phase and variation of lattice constants follows Vegard's law. XRD and TEM measurements show that the crystallite size of the nanocrystals decrease with increase in Co doping concentration. SAED patterns confirm the monocrystalline nature of the samples. The study of the lattice dynamics using Raman spectroscopy and Fourier transform infrared (FTIR) spectroscopy shows the existence of many disorder activated forbidden optical phonon modes, along with the corresponding classical modes, signifying Co induced local symmetry breaking in the nanocrystals. UV-Vis spectroscopy shows that the optical band gap has red shifted with increase in doping concentration. The study of Urbach energy confirms the increase in disorder in the nanocrystals with Co doping. Local symmetry breaking induced UV emission along with violet, blue and green luminescence has been observed from the PL study. The spectral contribution of UV emission decreases and green luminescence increases with increase in doping. Using PL, in conjunction with Raman spectroscopy, the type of oxygen vacancy induced in the nanocrystals on Co doping has been confirmed and the position of the defect levels in the forbidden zone (w.r.t. the optical band gap) has been studied.