We demonstrate here the wet chemical synthesis of cobalt doped γ-Fe2O3 nanoparticles and the subsequent effect on magnetic properties with the variation in dopant concentration. It is observed that cobalt can be homogeneously doped into the γ-Fe2O3 lattice up to 5 mol% without any appreciable change in the particle size ( nm). Further increase in cobalt concentration (10 mol% here) resulted in an increase in particle size ( nm) due to possible adsorption of a cobalt layer on the surface of γ-Fe2O3 nanoparticles rather than complete doping in the iron oxide lattice. The ac susceptibility measurements revealed an increase in blocking temperature (TB) with percentage variation in cobalt doping (2–10%), indicating substitution of Fe3+ ions by Co2+ ions in the γ-Fe2O3 lattice. The dc magnetization measurements showed an increase in saturation magnetization only up to 5%, beyond which it significantly diminished. The reduction in saturation magnetization is attributed to the contribution from surface anisotropy in cobalt coated γ-Fe2O3 nanoparticles.