X-Ray magnetic circular dichroism (XMCD) experiments on diluted magnetic semiconductor nanocrystals (2–7 nm) are reported in order to study their local electronic structure and magnetic properties. ZnSe nanoparticles containing either single manganese ions (Mn2+) distributed in the lattice of the entire particle or a MnSe core in the center are prepared using high temperature approaches. The Mn2+ concentration is varied between less than one to several tens of manganese ions per nanocrystal. For all samples it is shown that the Mn2+ is exclusively present in the bulk of ZnSe nanoparticles with no evidence for oxidation to higher Mn-oxidation states. The magnetic ions are highly polarized inside the nanocrystals reaching about 80% of the theoretical value of a pure d5 state under identical conditions for the case of isolated manganese ions. Nanocrystals with a MnSe core ZnSe shell structure reach <50% of this value. Thus, their polarization is significantly more hindered, which is due to the significantly enhanced Mn–Mn interactions and a more distorted crystalline lattice. In contrast, no coupling between the manganese centers is observed in the nanoparticles doped samples with low concentrations of Mn2+, indicating that these ions are isolated in the bulk of the nanoparticles.