Transparent cobalt-doped zinc aluminate spinel (gahnite), Co²⁺:ZnAl₂O₄, ceramics were fabricated by hot pressing of (Zn,Co)Al₂O₄/ZnF₂ nanopowders at 1520 °C for 4 h. A novel approach was suggested for the preparation of (Zn,Co)Al₂O₄ precursor: the (Zn,Co)Al₂O₄ powders were synthesized by mixing an alcohol solution of aluminium isopropoxide with a joint aqueous solution of zinc formate (the source of zinc), cobalt nitrate and zinc fluoride (the sintering additive) followed by drying and calcination in air. The study of the thermal behavior of precursors revealed an optimum calcination temperature (700 °C) preventing the loss of the sintering additive (ZnF₂). The effect of the ZnF₂ content (3–10 wt%) on the microstructure, the cobalt doping concentration, absorption and luminescence of ceramics was systematically studied. The ceramics exhibit a close-packed microstructure with a mean grain size of 50–70 μm and high in-line transmission (about 84% at ∼2 μm). The actual concentration of Co²⁺ ions in tetrahedral (T_d) sites of gahnite is lower than the Co²⁺ doping level and it decreases with the ZnF₂ content. We propose a possible mechanism of this variation including both the losses of Co²⁺ via evaporation of the intermediate CoF₂ phase and a partial location of Co²⁺ ions in octahedral (O_h) sites of gahnite due to its partly inverse spinel structure. The developed ceramics are promising for saturable absorbers of erbium lasers.