The structural and electronic properties of MnxGe1−x alloys (x⩽0.15) fabricated by ion implantation are investigated by means of x-ray diffraction and synchrotron radiation photoemission spectroscopy. The diffraction patterns point to the presence of ferromagnetic Mn5Ge3 nanoparticles; however, valence band spectra, interpreted by means of accurate ab initio calculations including Hubbard-like correlations, show clear fingerprints of an effective substitutional Mn dilution in the Ge semiconducting host.