CdSe is an important II-VI, n-type direct band gap semiconductor with wide band gap (bulk band gap of 2.6 eV) and an attractive host for the development of doped nanoparticles. Poly vinyl alcohol (PVA) is used as a capping agent to stabilize the CdSe nanoparticles. The optical properties of Co (II) ion doped PVA capped CdSe nanoparticles grown at room temperature are studied in the wavelength region of 200-1400 nm. The spectrum of Co (II) ion doped PVA capped CdSe nanoparticles exhibit five bands at 1185, 620, 602, 548 and 465 nm (8437, 16125, 16607, 18243 and 21499 cm-1). The bands observed at 1185, 548 and 465 nm are correspond to the three spin allowed transitions 4T1g (F) → 4T2g (F), 4T1g (F) → 4A2g (F) and 4T1g (F) → 4T1g (P) respectively. The other bands observed at 602 nm and 620 nm are assigned to spin forbidden transitions 4T1g (F) → 2T2g (G), 4T1g (F) → 2T1g (G) . The small value of the Urbach energy indicates greater stability of the prepared sample.