The electron and hole states in a CdTe quantum dot containing a single magnetic impurity in an external magnetic field are investigated using a multiband approximation which includes the heavy hole–light hole coupling effects. The electron–hole spin interactions and sp–d interactions between the electron, the hole and the magnetic impurity are also included. The exciton energy levels and optical transitions are evaluated using the exact diagonalization scheme. A novel mechanism is proposed here to manipulate impurity spin in the quantum dot which allows us to drive selectively the spin of the magnetic atom into each of its six possible orientations.