We investigate the properties of random lasing in nanocrystalline ZnO powders. The lowest threshold for lasing occurs for average particle diameters of about 260 nm. Reproducible lasing features are achieved for reduced ensemble sizes. Spatially resolved luminescence spectroscopy is used to probe directly the degree of localization of random laser mode. We find that strongly confined and extended modes can co-exist in the same spatial area. However, localized modes appear for small optical gain while extended modes are only supported in the presence of large optical gain, as is expected from theory. Localized and extended random-laser modes co-exist in space but appear in spectral regions of low and high optical gain, respectively.