Transition metal (Mn and Ni) doped ZnO nanocrystals with a diameter of 20 nm were fabricated by a low temperature solution processing technique. The incorporation of Ni and Mn into the ZnO lattice is evidenced by the shrinkage or expansion of the lattice parameters of ZnO in response to the transition metal dopants as determined by structure refinements. The E2 (High) phonon lines in Raman spectra of all the samples show large redshift of more than 6 cm-1 in comparison with that of the ZnO bulk single crystal. Especially, a further redshift of 3 cm-1 and broadening effect in the Raman spectra of the 5% Ni doped ZnO nanocrystals in comparison with the undoped ZnO nanocrystals indicate that the transition metal introduced defects and host disorder into the ZnO. The obtained nanocrystals are ferromagnetic at room temperature.