Theoretical calculation based on density functional theory (DFT) and local density approximation (LDA) has been carried out to study the magnetic properties of Ni doped ZnO. The results show that ferromagnetism (FM) coupling between Ni atoms is more stable for 8 geometrically distinct configurations. The results from density of states show that O 2p hybridizes with Ni 3d, which results in electronic states spin polarization at the Fermi energy. Moreover, the effect of oxygen vacancy on FM properties of Ni doped ZnO has also been investigated. It was found that FM coupling is enhanced in the presence of oxygen vacancy, which is strong enough to lead to electron-mediated ferromagnetism at room temperature. In addition, the origin of the FM state in Ni doped ZnO has also been discussed by analyzing the coupling of Ni 3d levels. We also analyzed the strain effect on FM properties of Ni doped ZnO.