High quality Cr-doped ZnO nanoparticles from the gas phase were prepared and investigated with respect to their structural, optical and magnetic properties. The extended x-ray absorption fine structure and the x-ray absorption near edge structure of the particles verify that after nanoparticle preparation Cr is incorporated as Cr3+ ) at least partially on sites with a 4-fold oxygen configuration, most likely on a Zn site, into the wurtzite lattice. Despite the fact that Cr is known to act as an efficient non-radiative loss centre for near band gap emission (NBE), a pronounced NBE is obtained up to room temperature even for a nominal Cr concentration of 10 at.%. Annealing at 1000 degrees C results in a significant improvement of the photoluminescence efficiency and a reduced PL linewidth down to 2.9 meV at low temperatures while the structural and magnetic data indicate the formation of ZnCr2O4 clusters.