Optoelectronic applications with transparent conducting oxides have been made possible by modulating the carrier density of wide band gap oxides with doping. We demonstrate the modulation of the density of states (DOS) at the Fermi level in nanocrystalline CuAlO2 particles synthesized using a sol–gel technique, as a function of doping with a magnetic impurity (Ni). This behavior is directly correlated with structural studies using X-ray diffraction and magnetic properties which show a similar trend. Our results can be understood in a picture where charge hopping occurs through surface or defect states, rather than by direct hopping between the quantum-confined states of the nanocrystal, and an increase in the DOS at the Fermi level caused by the substitution of Ni atoms at the Al site.