To establish intrinsic ferromagnetism (FM) and to detect its micro-structural origin (if any), sol-gel derived Zn 0.95 Mn 0.05 O films have been undergone low energy (800 keV) Ar 4+ ion irradiation. The structural, optical, magnetic and micro-structural properties of irradiated and un-irradiated films were investigated by X-ray diffraction (XRD), UV-visible and photoluminescence (PL) spectroscopy, field and temperature dependent magnetization measurements, X-ray absorption near edge spectroscopy (XANES) and extended X-ray absorption fine structure (EXAFS) spectroscopy. All the films exhibit single-phase wurtzite structure and intrinsic FM. The band gap and band tail parameters show systematic variation with fluence of irradiation. PL spectra exhibit a green emission peak (oxygen vacancy) and that has been suppressed significantly for the film with low fluence (5 × 10 14 ions per cm 2 ) of irradiation. The film irradiated with low fluence exhibits an absence of antiferromagnetic (AFM) interaction and the strongest FM. The studies of XANES and EXAFS indicate a difference in oxidation state and local environment for Mn in comparison to Zn in the host ZnO matrix. The film that exhibits strong FM also shows a comparatively higher number of tetrahedral coordinated Mn ions. The magnetic properties have been correlated with optical and micro-structural properties and low fluence of ion irradiation has been supposed to be optimized. © The Royal Society of Chemistry 2017.