Carbon-incorporated CdO (CdO–C) nanocrystallites were synthesised by sol–gel technique including sucrose (C12H22O11) as a source of carbon ions. This investigation aimed to disclose the necessary synthesis conditions to create room-temperature ferromagnetic (RT-FM) properties in host CdO–C system. Therefore, structural, optical and magnetic properties of CdO–C samples were systematically investigated. The X-ray diffraction (XRD) method was used to study the structural properties, and the diffuse reflection spectroscopy (DRS) method was used to study the optical properties. It was established that post-annealing of synthesised samples in H2 atmosphere could create RT-FM. The experimental results were discussed in the framework of previous studies of other transparent conducting oxides (TCOs). The magnetic properties of CdO–C system were studied here for the first time. It was found that CdO–C nanopowder of tailored FM properties could be used as a candidate for TCO applications. © 2019, Springer Science+Business Media, LLC, part of Springer Nature.