Diluted magnetic semiconductors (DMS) are created by introducing transition metal ions into semiconductors, which enables new applications, particularly in zinc oxide (ZnO) nanoparticles. In this study, we present a detailed X-band electron paramagnetic resonance (EPR) investigation of ZnO doped with Co \(^{2+}\) and Pd \(^{2+}\) , exploring the impact of Pd incorporation on the spin dynamics and local environment of Co \(^{2+}\) ions. By analyzing the resonance characteristics, linewidths, and temperature dependence of the EPR signals, we identify that Pd doping selectively modifies the zero-field splitting (ZFS) terms and spin–lattice relaxation mechanisms. The linewidths exhibit a temperature-dependent broadening, with a fitted slope of \( E = 2.31 \, \mathrm {Oe/K} \) corresponding to \( g = 2.25(2) \) in Pd-Co-doped samples, as opposed to \( E = 2.12 \, \mathrm {Oe/K} \) in the Co-doped one. Additionally, the linewidth broadening observed at \(g = 2.25(2)\) increases by approximately 30% upon Pd doping. These results provide a deeper understanding of the role of Pd in influencing spin dynamics and the local electronic environment in the ZnO matrix, offering new insights into the interplay between dopants and the host material’s properties. These findings are supported by numerical data and comparisons with existing literature.