An efficient method to investigate the microstructure and spatial distribution of nitrogen and nitrogen-vacancy (N-V) defects in detonation nanodiamond (DND) with primary particle sizes ranging from approximately 3 to 50 nm is presented. Detailed analysis reveals atomic nitrogen concentrations as high as 3 at% in 50% of diamond primary particles with sizes smaller than 6 nm. A non-uniform distribution of nitrogen within larger primary DND particles is also presented, indicating a preference for location within the defective central part or at twin boundaries. A photoluminescence (PL) spectrum with well-pronounced zero-phonon lines related to the N-V centers is demonstrated for the first time for electron-irradiated and annealed DND particles at continuous laser excitation. Combined Raman and PL analysis of DND crystallites dispersed on a Si substrate leads to the conclusion that the observed N-V luminescence originates from primary particles with sizes exceeding 30 nm. These findings demonstrate that by manipulation of the size/nitrogen content in DND there are prospects for mass production of nanodiamond photoemitters based on bright and stable luminescence from nitrogen-related defects.