Linear response time-dependent hybrid density functional theory has been applied for the first time to describe optical transitions characteristic of Co2+- and Mn2+-doped ZnO quantum dots (QDs) with sizes up to 300 atoms (\~1.8 nm diam) and to investigate QD size effects on the absorption spectra. Particular attention is given to charge-transfer (CT or “photoionization”) excited states. For both dopants, CT transitions are calculated to appear at sub-band-gap energies and extend into the ZnO excitonic region. CT transitions involving excitation of dopant d electrons to the ZnO conduction band occur lowest in energy, and additional CT transitions corresponding to promotion of ZnO valence band electrons to the dopant d orbitals are found at higher energies, consistent with experimental results. The CT energies are found to depend on the QD diameter. Analysis of excited-state electron and hole density distributions shows that, for both CT types, the electron and hole are localized to some extent around the impurity ion, which results in “heavier” photogenerated carriers than predicted from simple effective mass considerations. In addition to CT transitions, the Co2+-doped ZnO QDs also exhibit characteristic d-d excitations whose experimental energies are reproduced well and do not depend on the size of the QD.