In0.97-xFexSn0.03)(2)O-3 films with x - 0.023, 0.05, 0.07 and 0.085 were prepared by RF-magnetron sputtering. The effects of Fe doping and oxygen vacancies on the magnetic and transport properties of the (In0.97-xFexSn0.03)(2)O-3 films are studied systematically by X-ray diffraction (XRD), X-ray photoelectron spectroscopy (XPS), X-ray absorption fine structure (XAFS), Hall effect, R-T and magnetic measurements. Combining X-ray absorption spectroscopy with full multiple-scattering ab initio calculations, it reveals that Fe dopant ions substitute In3+ sites of the In2O3 lattice with a mixed-valence (Fe2+/Fe3+) and form Fe-In1 + 2V(O) complex with O vacancy in the nearest coordination shell. Magnetic characterizations show that all the films display a clear room-temperature (RT) ferromagnetic behavior and the saturated magnetization decreases monotonically with an increase in Fe concentration. Temperature dependent resistivity data suggest the conduction mechanism of the Mott variable range hopping and Hard band gap hopping. The strong localization of carriers suggests the bound magnetic polarons scenario. It can be concluded that the local lattice distortion and oxygen vacancies around the Fe atoms play a key role in the observed intrinsic RT ferromagnetism in the (In0.97-xFexSn0.03)(2)O-3 films. The monotonic reduction in M-s with Fe doping has a strong correlation with the localization radius x of variable range hopping of carriers, indicating that the variation in the localization effect could strongly modify the ferromagnetism of (In0.97-xFexSn0.03)(2)O-3 films.