Based on the density functional theory, the geometries, electrical structures and optical properties of Co-doped MgF2 system （Co:MgF2） are studied by first-principles ultra-soft pseudopotential plane-wave approach. With Co-doping increasing, a tetragonal-rhombic structural transition is obtained in Co:MgF2 The band gap decreases with increasing Co-doping, and a semiconductor-conductor transition is observed. Also, the calculations show that the static dielectric constant and the absorption coefficient can be remarkably modulated by Co-doping, indicating the potential applications of Co: MgF2 optical system.