Optical absorption (OA), magnetic force microscopy (MFM), and photoluminescence (PL) measurements were employed to study Cd1−xMnxS nanoparticles (NPs), grown in a glass matrix, at different x-concentrations. The formation of two well defined groups of NPs with different sizes was detected by OA spectra at room temperature and confirmed by MFM images, from which they were identified as quantum dots (QDs) and bulk-like nanocrystals (NCs). Emissions from luminescent states were observed in the temperature dependent PL spectra of both groups of NPs, including those from deep defects which were attributed to the presence of divacancies (VCd–VS) in the hexagonal wurtzite structure. Furthermore, we have come up with a model based on rate equations that describes energy transfers involving the excitonic states of QDs, the conduction band of bulk-like NCs, and the shallow virtual levels of NPs. This model was used to fit the integrated PL intensity of the corresponding NP groups, and a good agreement between them confirms that the model suitably describes the temperature dependent carrier dynamics of Cd1−xMnxS NPs.