Effect of Fe doping on structural, optical and magnetic properties of the (In1-xFex)2O3 films (0 ≤ x ≤ 0.31) are investigated systematically by X-ray diffraction (XRD), X-ray photoelectron spectroscopy (XPS), extended X-ray absorption fine structure (EXAFS), UV-Vis, Hall effect and magnetic measurements. Combining XRD, XPS and EXAFS measurements, it reveals that Fe dopant ions substitute for In3+ sites of In2O3 lattice with a mixed-valence (Fe2+/Fe3+) in the (In1-xFex)2O3 films with low Fe concentration (x ≤ 0.16), while a part of Fe atoms form the precipitate of Fe metal clusters in the (In1-xFex)2O3 films with high Fe concentration (x ≥ 0.22). The decreased transmittance and optical band gap of films with Fe doping is ascribed to sp-d exchange interaction associated with the Fe dopants. Magnetic characterizations show that all the films display a clear room-temperature (RT) ferromagnetic behavior. The saturated magnetization (MS) increases monotonically with the increase of Fe concentration and reaches 85.5 emu/cm3 for the (In0.69Fe0.31)2O3 film. However, the Hall measurements show that the carrier concentration nc decreases monotonically with Fe doping, implying that the ferromagnetism is not mediated by carriers in the (In1-xFex)2O3 films (x ≤ 0.16). It can be concluded that oxygen vacancies play an important role in activating the observed intrinsic RT ferromagnetism in the (In1-xFex)2O3 films (x ≤ 0.16). However, the larger MS in the (In1-xFex)2O3 films (x ≥ 0.22) should be partially due to precipitated Fe metal clusters.