The results on the synthesis and characterization of highly monodisperse Fe-doped ZnO nanocrystals are presented. Stable suspensions of these materials were produced in an ethanol solution at room temperature. To promote crystal growth, the suspensions of nanocrystals were aged in contact with their mother liquors. X-ray diffraction characterization of doped systems at various Fe-atomic fractions x confirmed the exclusive formation of the host ZnO with the wurtzite structure. High resolution transmission electron microscopy analyses of the suspensions revealed the high monodispersity and crystallinity of the 6-8 nm nanocrystals. Ultraviolet-visible measurements confirmed not only the nanocrystalline nature of the samples but also evidenced the continuous growth of the crystals when aged in their mother liquors. Room-temperature magnetic measurements indicated that the ferromagnetic behavior of doped ZnO was dependent on composition and crystal size of produced nanocrystals. Room-temperature ferromagnetism was established in the nanocrystals synthesized at x=0.05 and 0.08 aged for 24 and 360 h, respectively. The corresponding room-temperature coercivity values were 45 and 78 Oe. © 2008 American Institute of Physics.