[en] Multiferroics are potentially future materials in spintronics for memory and data storage applications. In this paper, a series of Li-doped nanoparticles were studied to investigate the effects of Li on the physical properties of the ZnO system. Analysis of structural micrographs and Raman spectra confirmed the wurtzite structure of doped samples. The vibrational modes of Zinc and oxygen atoms were labeled as E_2_L and E_2_H with an additional mode at 134 cm"−"1 in the doped samples. We observed the presence of interstitial and substitutional Li defects from the deconvolution of Li 1s core level spectra using high resolution x-ray photoelectron spectroscopy. The approximated measured values (e.g., for y = 0.04 and 0.08 samples) for interstitial Li defects were 27% and 39%, and for substitutional Li defects were 73% and 61% respectively. For the y = 0.06 composition, dc resistivity was the highest, while the transition temperature (measured from dielectric loss) was the lowest. We observed a non-monotonic trend of saturation magnetization (obtained at 50 K) against the Li concentration. The compositions having the highest magnetic moment were those having higher interstitial Li defects and lower dc resistivity. Higher hole carrier concentrations and dielectric transition temperatures were correlated with the higher magnetization. Interstitial Li defects played a key role in stabilizing more cationic Zn vacancies. Hole carriers were the major cause of long-range ferromagnetic order in these nanoparticles. (paper)