ZnO:Mn semiconductor quantum dots were prepared by solution casting led microemulsion route. Quantum dots of average size ∼2 nm were noticed in transmission electron micrographs. The present work highlights colour change phenomena (photochromic effect) of quantum dots while subjected to photon illumination. The magneto-optic measurements e.g. magnetic field (H) vs angle of rotation (θ) show step like behavior and is ascribed to the quantum confinement effect of diluted magnetic ZnO:Mn nanostructures. Further, underlying mechanism responsible for exhibiting photochromism and magneto-optic effects are also discussed.