The (In1-xFex)(2)O-3 films (0 <= x <= 0.09) were prepared by RF-magnetron sputtering. Structural, magnetic and transport properties of the films were investigated systematically both experimentally and theoretically. X-ray absorption spectroscopy (XAS) and multiple-scattering ab initio theoretical calculations reveal that Fe dopant atoms are substitutionally incorporated into In2O3 lattice with a mixed-valence (Fe2+/Fe3+) and form Fe-In1+2 V-O complex. All the films display room temperature ferromagnetism and the saturated magnetization (M-s) increases monotonically with the increase of Fe concentration. The Mott variable range hopping (VRH) transport behavior dominates the conduction mechanism of the films at low temperature, confirming that the carriers are localized. The Fe doping has profound effects on the positive and negative MR contributions. The positive MR contribution becomes more pronounced with Fe doping, reflecting the occurrence of spin polarization and stronger s-d exchange interaction. The bound magnetic polarons (BMPs) associated with oxygen vacancy can be considered to play an important role in achieving the ferromagnetic order of the (In1-xFex)(2)O-3 films. The variation of Ms with Fe doping has a strong correlation with the localization radius xi of carriers and the characteristic hopping temperature T-0, indicating that the change of localization effect can remarkably influence the ferromagnetic order of the (In1-xFex)(2)O-3 films.