<p>Multifunctional and single-phase Co²⁺-substituted SnO₂ dilute magnetic semiconductors (DMS) were synthesized via a simple co-precipitation method. Electron paramagnetic resonance (EPR) analysis confirms the successful incorporation of divalent cobalt ions into the SnO₂ host lattice, both at substitutional and interstitial sites. Optical studies reveal a reduction in the energy band gap and an enhancement in ultraviolet (UV) absorption with increasing Co²⁺doping, with an absorption edge observed at 282&#xa0;nm. Photoluminescence (PL) measurements indicate a strong red emission at 639&#xa0;nm, which remains relatively unchanged with varying Co²⁺concentrations. The material’s transparency and conductivity render it suitable for optoelectronic and magneto-optical applications. Among the investigated compositions, the 5% Co²⁺-doped sample exhibits the highest ferromagnetic saturation (2.798&#xa0;emu/g) and coercivity (206.17 Oe) at room temperature, attributed to the exchange interactions between Co²⁺ ions mediated by oxygen vacancies. The low coercivity suggests facile magnetic switching with minimal hysteresis loss and weak domain wall pinning, making these materials promising candidates for spintronic applications such as magnetic sensors, memory devices, and spin-based transistors. A detailed electronic structure and bonding analysis using the maximum entropy method (MEM) indicates that at 5% Co²⁺ doping, the Co²⁺ ions are optimally diluted within the Sn⁴⁺ host lattice. A newly established empirical correlation highlights the relationship between saturation magnetization and the MEM-derived electronic structure. The findings suggest that achieving an appropriate Co²⁺ substitution within the Sn⁴⁺ host lattice and minimized interstitial charge accumulation while maintaining balanced apical and equatorial (Sn/Co)-O bonding is critical for maximizing magnetic saturation.</p>