Co was deposited onto CdTe thin films by electron beam evaporation technique. Co diffusion into CdTe thin films was carried out by annealing at temperatures of 623, 673 and 723 K for I h, in air atmosphere. XRD patterns of the films with and without Co showed a typical (1 1 1) reflections with almost same intensity. It is observed that the diffusion of Co does not strongly change the crystal structure of the films. The magnetization measurements of the films have been determined by using a Vibrating Sample Magnetometer. Room temperature magnetization curves indicate that the Co diffused films display an improved ferromagnetic behavior for the films annealed at 623 and 673 K. The films annealed at 723 K show a decreasing value of magnetization because of the phase segregation. The Curie temperatures of films were estimated to be above room temperature. The optical measurements support that Co incorporates into CdTe films as Co2+ ions which are replaced Cd2+ ions and the band gap energies decrease with incorporation of Co into CdTe. (C) 2007 Elsevier B.V. All rights reserved.