Zinc oxide is a multifunctional material with important applications in areas like electronics, optoelectronics, sensors and photocatalysis. In the present work, the Cu-doped ZnO (Cu = 0%, 2% and 5%) nanoparticles have been synthesized and investigated using various techniques like XRD, SEM, XPS, PL and UV spectroscopic measurements. The study is aimed at exploring the mechanism of room-temperature ferromagnetism in these dilute magnetic semiconductors, which has been a mystery for a long time. The X-ray diffraction patterns revealed the hexagonal wurtzite crystal structure of the P63mc space group and an average crystalline size of 26 nm to 32 nm. The morphology has been analyzed using SEM images, which depict irregular grain size distribution and agglomerated spheroid-like particle structure. The X-ray photoelectron spectroscopy (XPS) findings exhibited the inducement of remarkable oxygen vacancies (Vo) with Cu doping. The 2% Cu-doped sample shows the maximum value of the oxygen vacancies. The magnetization measurements reveal weak ferromagnetism in the pure ZnO sample, whereas the Cu-doped ZnO nanocrystalline samples show remarkable room temperature ferromagnetism (RTFM). The 2% Cu-doped sample depicts the highest value of saturation magnetization. The UV spectroscopy indicates that the band gap is reduced upon Cu doping; the value of Eg is found to be the lowest (2.96 eV) for the 2% Cu-doped sample. The Photoluminescence (PL) spectroscopy indicates the presence of defect-related states, which are found to be the maximum for the 2% Cu-doped sample, in good agreement with the XPS results. The induced magnetization in the Cu-doped nano-crystalline samples is found to show a direct relationship with the oxygen vacancies and is proposed to be caused by the exchange interactions between the Cu2+ ions and the oxygen vacancies. The inducement of ferromagnetism in ZnO renders it a potential system for spintronic devices. The key benefits of spintronic devices are their compact size, excellent luminous efficiency, ecologically benign composition, long persistence and potential energy savings.